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LINE: Hiring Expectations, Manufacturing Job Vacancies Rise

By Theresa Minton-Eversole  2/3/2011
 

The latest gross domestic product (GDP) report released Jan. 28, 2011, by the U.S. Commerce Department shows that economic expansion is still too slow to bring down the nation’s high unemployment rate. But the uptick in the GDP for the fourth quarter of 2010—the sixth straight quarter of growth—is seen as yet another sign that the country is poised for an economic rebound.

"It's encouraging that growth is continuing," David Wyss, chief economist at Standard & Poor's, told The Washington Post, "and it seems to be becoming more sustainable and more organic growth rather than being forced by the government."

Meanwhile, the U.S. private-sector labor force is forecasted to add jobs in manufacturing and services in February 2011, according to the Society for Human Resource Management’s (SHRM) latest Leading Indicators of National Employment (LINE) survey, released Feb. 3, 2011.

Moreover, compensation packages for new hires increased slightly in January 2011, as the rate of increase for wages and benefits rose on an annual basis among manufacturing and service companies.

The LINE Employment Report examines four key areas: employers’ hiring expectations, new-hire compensation, difficulty in recruiting top-level talent and job vacancies. It is based on a monthly survey of private-sector human resource professionals at more than 500 manufacturing and 500 service-sector companies. Together, these sectors employ more than 90 percent of the nation’s private-sector workers.

 

Employment Expectations

Manufacturing

Service

 

In February 2011, hiring will increase in manufacturing and services on an annual basis.

 

+12.4

 

 

 

 


+9.7

Recruiting Difficulty

 

 

 

In January 2011, the index for recruiting difficulty rose sharply in manufacturing and services compared with a year ago.

 

 

 

+14.3

 

 

 

 


+13.6

New-Hire Compensation

 

 

 

The rate of increase for new-hire compensation in January 2011 rose slightly on an annual basis in manufacturing and services.

 

 

+3.8

 

 

 

 


+2.1

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

Employment Expectations

Although large-scale job creation has not taken hold, hiring rates are at or near four-year highs in February 2011 in manufacturing and services, according to LINE, with hiring rates up compared to February 2010.

The manufacturing hiring index is expected to improve in February 2011, on a year-over-year basis, by a net of 12.4 points, meaning that a net of 42.7 percent of companies will hire in February 2011, compared to the 30.3 percent that added jobs in 2010.

Service-sector hiring will rise in February 2011, by a net of 9.7 points (a net of 33.2 percent will add jobs, compared to the 23.5 percent that added jobs in 2010). Nevertheless, the jobless rate is expected to remain high, and recent year-over-year increases in hiring, though positive, reflect the sluggish growth in the job market in 2010.

Notably, the pace of hiring has not accelerated in the last several months.

Still, 50.6 percent of responding manufacturing companies said they have hiring plans for February 2011—a four-year high—while 7.9 percent of respondents reported plans for layoffs—a four-year low. Similarly, in the service sector, 40.3 percent of companies reported plans to add jobs in February 2011—close to the four-year high for the month of February reached in 2008—and the percent of those reporting layoff plans, 7.1 percent, is another four-year low.

Job Vacancies Prove Mixed Bag for Sectors’ Exempt, Nonexempt Positions

Overall, job openings for salaried positions rose in January 2011, in manufacturing but fell slightly in the services sector.

In the manufacturing sector, a net total of 17.2 percent of respondents reported increases in exempt vacancies in January 2011, representing an 8.6-point increase from January 2010. And in the service sector, a net total of 3.3 percent of respondents reported increases in exempt vacancies in January 2011, a 4.4-point decrease from January 2010.

Despite the relatively small change in both sectors, however, the percentage of companies reporting actual increases in exempt vacancies was at a four-year high in both manufacturing (24.8 percent) and services (16.9 percent) for the month of January.

Vacancies for hourly jobs increased in both sectors in January 2011, LINE data shows. A net total of 26.8 percent of manufacturing respondents reported that nonexempt vacancies increased in January 2011, representing an 11.2-point increase from January 2010. Hiring leveled off in manufacturing in the second half of 2010, according to U.S. Bureau of Labor Statistics (BLS) and LINE data.

For nonexempt service positions, a net total of 12.8 percent of respondents reported increased vacancies in January 2011, marking a gain of 5.5 points from January 2010. The rise in vacancies might be partially driven by hiring of temporary help, which has increased by 495,000 jobs since a low in September 2009, according to the BLS.

“This improved employment picture is most likely what is behind the rise in recruiting difficulty that HR professionals are reporting,” said Jennifer Schramm, manager of workplace trends and forecasting for SHRM. “Especially in the manufacturing sector, a rise in recruiting difficulty may be why we are seeing an increase in job vacancies. Employers may be having more difficulty finding the right candidates for jobs, in particular for positions with very specific or high skills requirements.”

Recruiting Difficulty

Indeed, HR professionals reportedly had a more difficult time recruiting for key positions in January 2011, compared with January 2010, in both sectors. Even though only a small percentage of respondents reported having a tougher time finding top talent, the level of difficulty increased compared with 2010.

In the manufacturing sector, a net of 8.3 percent of respondents had more difficulty with recruiting in January 2011. This is a moderate net increase of 14.3 points from January 2010, when a net of 6.0 percent reported less difficulty with recruiting.

 In the service sector, a net of 1.2 percent of HR professionals had more difficulty recruiting in January 2011. This is an increase of 13.6 points from January 2010, when a net total of 12.4 percent of HR professionals had less difficulty finding top talent.

Considering that millions of people are seeking work and cannot obtain employment in their industries, the rise in recruiting difficulty in both sectors might be attributed to new or enhanced skill requirements for newly created, high-level jobs in manufacturing and services.

New-Hire Compensation

Compensation packages for new hires increased slightly in January 2011, according to LINE data. In the manufacturing sector, a net total of 5.3 percent of respondents reported increasing new-hire compensation in January 2011, an increase of 3.8 points from January 2010.

In the service sector, a net total of 2.9 percent of companies increased new-hire compensation in January 2011, representing a 2.1-point increase from January 2010, when a net of 0.8 percent of service companies increased new-hire compensation.

Still, the low rates of change in the two sectors suggest that most organizations are keeping new-hire compensation rates flat, and that many people landing new jobs are continuing to accept lower wages and benefits without much negotiation around pay.

Theresa Minton-Eversole is an online editor/manager for SHRM.

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