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Expected Upswing in June Hiring, but Worker Shortages Problematic
Manufacturing hiring expected to jump sharply

By Theresa Minton-Eversole  6/5/2014
 

Hiring rates will reach four-year highs for the month of June in the manufacturing and service sectors, according to the Society for Human Resource Management’s (SHRM) Leading Indicators of National Employment (LINE) report for June 2014. But problems with finding skilled workers for available jobs still appear to plague the U.S. and many other global economies, according to the most recent LINE reports and the recently released results of a global talent shortage survey.

The LINE examines employers’ hiring expectations, job vacancies, difficulty in recruiting top-level talent and new-hire compensation, based on a monthly survey of private-sector human resource professionals at more than 500 manufacturing and 500 service-sector companies.

Employment Expectations

Manufacturing

Service

 

In June, the hiring rate will rise significantly in manufacturing and slightly in services compared with a year ago. 

 

+19.7

 

+0.7

Recruiting Difficulty

 

 

 

In May, recruiting difficulty increased in both sectors compared with May 2013. 

 

+6.3

 

+3.3

New-Hire Compensation

 

 

 

In May, the rate of increase for new-hire compensation fell slightly in both sectors compared with a year ago.

 

-0.83

 

-1.2

Source: SHRM Leading Indicators of National Employment (LINE), shrm.org/line

Employment Expectations

The U.S. four-week moving average of initial claims for unemployment insurance benefits fell by 11,250 in the week ended May 24, 2014, to 311,500 from the previous week’s revised figure of 322,750, according to seasonally adjusted numbers released May 29 by the U.S. Department of Labor. This is the lowest level for this average since Aug. 11, 2007.

In addition, LINE data show job creation in June is expected to expand in both the manufacturing and service sectors compared with June 2013. Hiring activity will reach a four-year high for the month in both sectors, while layoffs will decline in both sectors compared with a year ago.

A net of 57 percent of manufacturers will add jobs in June (61.4 percent will hire, 4.4 percent will cut jobs), increasing the sector’s hiring index by 19.7 points compared with a year ago. In May, a net total of 23.8 percent of manufacturers reported increases in exempt vacancies (31.5 percent reported more vacancies, 7.7 percent reported fewer), up 3.8 points from May 2013. A net total of 30 percent of manufacturing respondents reported that nonexempt vacancies increased in May, a 0.3-point increase from May 2013.

A net of 43.6 percent of service-sector companies will grow payrolls in June (49.6 percent will hire, 6 percent will cut jobs), increasing the sector’s index by 0.7 points compared with a year ago. In the service sector, a net total of 12.7 percent of respondents reported increases in exempt vacancies in May (21 percent reported more vacancies, 8.3 percent reported fewer). This number is down by 4.7 points from May 2013. For nonexempt service positions, a net total of 22.6 percent of respondents reported increased vacancies in May. That figure marks an increase of 5.5 points from May 2013, as well as a three-year high for the month in the service sector.

U.S. staffing companies also employed an average of 2.96 million temporary and contract workers per week in the first quarter of 2014, up 3.2 percent from the first quarter of 2013, according to data released May 29 by the American Staffing Association (ASA). The average weekly employment in the first quarter was higher than in any first quarter since 2006, according to the ASA, which conducts its staffing employment and sales survey of approximately 10,000 companies on a quarterly basis.

“These increased employment expectations may signal a move into a more active recruiting environment,” said Jennifer Schramm, GPHR, manager, SHRM workforce trends and forecasting. “In this case, it is not surprising that recruiting difficulty rose in both sectors in May compared with the same time last year.”

Recruiting Difficulty

HR professionals’ challenges with landing candidates for key vacancies in their companies reached four-year highs for both the manufacturing and service sectors in May, according to the LINE report. A net of 18.2 percent of manufacturing respondents reported they had more difficulty with recruiting in May—an increase of 6.3 points from May 2013. A net of 18.7 percent of service-sector HR professionals also had a harder time with recruiting in May; this represents a jump of 3.3 points from a year ago. Both totals represent four-year highs for the month of May.

Other recent SHRM findings show that many HR professionals are having a difficult time with talent management and recruitment. A September 2013 SHRM survey found that 82 percent of high-tech companies reported difficulty recruiting for open full-time jobs.

Globally, employers continue to be plagued by talent shortages, according to the results of ManpowerGroup’s ninth annual Talent Shortage Survey, released May 30. The survey of more than 37,000 employers in 42 countries and territories found that 36 percent of employers are having difficulty finding candidates with the right skills to fill open positions. This survey percentage has increased for the second consecutive year and is at its highest level since 2007.

“Talent shortages continue to persist and are impeding employers’ ability to deliver value for their customers,” said ManpowerGroup CEO Jonas Prising in a press statement about the results. “Due to the lack of applicants with the right technical competencies, experience and soft skills, one out of three employers struggle to fill open roles. For nearly a decade, skilled trades and STEM [science, technology, engineering and math] positions are among the top 10 hardest jobs to fill, both globally and in the U.S.”

New-Hire Compensation

Few manufacturers or service-sector employers, however, report raising pay for new hires, according to the LINE report.

In the manufacturing sector, a net total of 9.7 percent of respondents reported increasing new-hire compensation in May, a decline of 0.3 points from May 2013. In the service sector, a net total of 6.7 percent of companies increased new-hire compensation in May, down 1.2 points from a year ago.

Overall, the index’s data show that most organizations are still keeping new-hire compensation rates flat. This is consistent with recent Bureau of Labor Statistics findings on real average hourly earnings, which fell 0.1 percent in April 2014 compared with April 2013.

“Once again, we are not seeing an accompanying rise in the compensation packages being offered to new hires,” Schramm said. “In fact, this index actually fell slightly in both sectors compared with the same time last year.”

Theresa Minton-Eversole is an online editor/manager for SHRM. Follow her @SHRMTheresa.

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