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Modest Job Growth, Recruiting to Continue in June 2011
 

By SHRM Online staff  6/2/2011
 

Manufacturers and service-sector companies will continue to add jobs in June 2011, but the pace of payroll growth remains insufficient to drive unemployment rates down significantly, according to the latest Society for Human Resource Management (SHRM) Leading Indicators of National Employment (LINE) survey report. 

The results reflect a labor market that is still struggling to create a volume of new jobs that would reduce the high unemployment rate, although the manufacturing sector added 29,000 jobs in April 2011 and the professional and business services—a key component of the broader service sector—grew by 51,000 jobs in April 2011, according to the U.S. Bureau of Labor Statistics (BLS).

“Though companies are still adding jobs, the rate of improvement compared to the same time last year has leveled off in the past few months, said Jennifer Schramm, GPHR, manager of SHRM workplace trends and forecasting. “So while year-over-year comparisons are still showing a positive increase from June 2010 in manufacturing, we haven’t seen the same in services.”

The LINE report is based on a monthly survey of private-sector human resource professionals at more than 500 manufacturing and 500 service-sector companies and examines employers’ hiring expectations, new-hire compensation, recruiting difficulties with top-level talent and job vacancies. The LINE employment expectations index provides an early indication of the BLS Employment Situation Report findings, which cover the same time period but are released approximately one month after the LINE report.

Employment Expectations

Manufacturing

Service

 

In June 2011, hiring is essentially unchanged on an annual basis in manufacturing and down moderately in the service sector.

 

+2.1

 

   

 

 

 

-14.4

Recruiting Difficulty

 

 

 

In May, the index for recruiting difficulty rose in both sectors in May 2011 compared with May 2010.

 

 

 

+8.6

 

 

 

 

+13.1

New-Hire Compensation

 

 

 

The rate of increase for new-hire compensation in May 2011 rose slightly in both sectors compared with May 2010.

 

 

+4.6

 

 

 

 

+6.3

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

Overall, the rate of job creation will rise slightly in manufacturing and will fall moderately in services in June 2011 compared with June 2010, according to the report. More HR professionals in manufacturing and services also reported increased difficulty with recruiting key candidates in May 2011 compared with May 2010. In addition, compensation packages for new hires in May 2011 increased. The rate of increase for wages and benefits rose on an annual basis in both sectors.

Employment Expectations Tempered by Recruiting Difficulties

The LINE manufacturing hiring index will improve in June 2011 on a year-over-year basis by a net of 2.1 points (a net of 47.0 percent of companies will hire in June 2011, compared with a net of 44.9 percent that added jobs in June 2010). Service-sector hiring will decrease in June 2011 by a net of 14.4 points (a net of 36.4 percent will add jobs in June 2011, compared with a net of 50.8 percent that added jobs in June 2010).

LINE’s recruiting difficulty index measures how difficult it is for firms to recruit candidates to fill the positions of greatest strategic importance to their companies.

“More companies in both sectors are hiring than are eliminating jobs,” said Schramm, “and many are starting to have trouble filling key positions. The percentage of HR professionals in both manufacturing and services reporting increased recruiting difficulty continues to rise.”

In the manufacturing sector, for example, a net of 14.1 percent of respondents had more difficulty with recruiting in May 2011. This represents a modest net increase of 8.6 points from May 2010, when a net of 5.5 percent of respondents reported increased difficulty with recruiting. In the service sector, a net of 8.0 percent of HR professionals had more difficulty recruiting in May 2011—a moderate increase of 13.1 points from May 2010, when a net total of 5.1 percent of HR professionals reported having less difficulty with finding top talent.

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

Exempt, Nonexempt Vacancies

Job openings for salaried positions rose slightly in both sectors in May 2011 compared with May 2010. In the manufacturing sector, a net total of 18.5 percent of respondents reported increases in exempt vacancies in May 2011—or a 3.6-point increase from May 2010. In the service sector, a net total of 21.6 percent of respondents reported increases in exempt vacancies in May 2011, representing a 2.3-point increase from May 2010.

The relatively small annual change in both sectors for vacant exempt positions might be an indicator of payroll stabilization for high-level, salaried jobs as the economy improves slowly.

Likewise vacancies for hourly manufacturing jobs remained virtually unchanged in May 2011, while service-sector respondents reported a slight rise in nonexempt vacancies for May 2011.

A net total of 24.0 percent of manufacturing respondents reported a minuscule increase in nonexempt vacancies in May 2011, or a 0.1-point increase compared with May 2010. Hiring in manufacturing, however, has steadily increased in 2011, according to LINE and BLS data. There were 228,000 job openings in manufacturing in March 2011, the highest level in six months, according to the BLS.

For nonexempt service positions, a net total of 26.8 percent of respondents reported increased vacancies in May 2011, an increase of 6.2 points from May 2010. There were nearly 1.3 million job openings combined in the professional and business services and education and health services sectors in March 2011, according to the BLS.

New-Hire Compensation

“More difficulty filling vacant positions is probably why new-hire compensation is also on the rise,” noted Schramm. “May was the eighth consecutive month of year-over-year increases in the percentage of HR professionals in both sectors reporting an increase in new-hire compensation.”

In the manufacturing sector, a net total of 8.3 percent of respondents reported increasing new-hire compensation in May 2011—an increase of 4.6 points from May 2010, when a net total of 3.7 percent of companies increased wages and benefits packages for new employees. In the service sector, a net total of 8.2 percent of companies increased new-hire compensation in May 2011—a 6.3-point increase from May 2010, when a net of 1.9 percent of service companies increased new-hire compensation.

Despite the increases in both sectors, most organizations still are keeping new-hire compensation rates flat, according to LINE data as well as data cited in recent federal research. Real average hourly earnings fell 0.3 percent from March 2011 to April 2011 and fell by 1.2 percent in April 2011 compared with April 2010, according to the BLS.

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