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Strong August Hiring Expected; Recruiting Difficulty Rising, Too
 

By Theresa Minton-Eversole  8/1/2013
 
Half of manufacturers and more than one-third of service-sector companies surveyed reported they will be hiring in August, according to the latest Leading Indicators of National Employment (LINE) survey, released by the Society for Human Resource Management (SHRM) Aug. 1, 2013. 

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

Employment Expectations

Manufacturing

Services

In August, the hiring rate will increase in both manufacturing and services compared with August 2012.

+9.3

 

+6.5

Recruiting Difficulty

 

 

In July recruiting difficulty rose in manufacturing and services compared with July 2012.

+4.3

 

+12.2

New-Hire Compensation

 

 

In July the rate of increase for new-hire compensation was essentially unchanged in both sectors compared with July 2012.

-0.4

 

 

+2.1

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

Employment Expectations

Hiring will rise moderately in the manufacturing sector. A net of 49.9 percent of manufacturers will add jobs in August (56.2 percent will hire; 6.3 percent will cut jobs)—a four-year high for the month of August. The sector’s hiring index will rise by 9.3 points from a year ago.

A net of 35.1 percent of service-sector companies will expand payrolls in August (41.2 percent will hire; 6.1 percent will cut jobs), representing a three-year high for sector hiring in August, and the index will rise by 6.5 points from  a year ago. August also marks the 13th consecutive month that the hiring rate rose in the service sector.

The LINE employment-expectations index compares favorably with reports from the U.S. Bureau of Labor Statistics (BLS). For example, several service industries have posted sizable job gains as of late, according to the BLS. LINE also provides an early indication of the BLS Employment Situation report, which covers the same monthly period but is released approximately one month after each LINE.

Exempt, Nonexempt Vacancies

Salaried-job openings fell slightly in both sectors in July compared with a year ago, while hourly vacancies increased in both sectors for the month.

In the manufacturing sector a net total of 18.9 percent of respondents reported increases in exempt vacancies in July (31.3 percent reported increases; 12.4 percent reported decreases), representing a 4.2-point decrease from July 2012. However, a net total of 19.2 percent of responding manufacturers said nonexempt vacancies increased in July (34.6 percent increased; 15.4 percent decreased), a 4.1-point jump from July 2012.

In the service sector a net total of 8.8 percent of respondents reported increases in exempt vacancies in July (25.4 percent reported increases; 16.6 percent reported decreases), marking a 1.8-point decrease from July 2012. For nonexempt service positions, a net total of 15.9 percent of respondents reported more vacancies for the month (32.6 percent increased; 16.7 percent decreased), resulting in a 1.5-point increase from July 2012.

Monthly nonexempt openings have not followed a specific trend lately when compared with the previous year. For every month since September 2009 (shortly after the end of the Great Recession), the manufacturing and service sectors have reported a net increase in nonexempt vacancies.

Recruiting Difficulty

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

A net of 20.2 percent of responding manufacturers found it more challenging to recruit in July, an increase of 4.3 points from July 2012. A net of 17.3 percent of service-sector HR professionals also had more difficulty recruiting during that month, representing an increase of 12.2 points from a year ago.

“With employment expectations following a solid trend in both sectors, it follows that recruiting difficulty also increased in July,” said Jennifer Schramm, GPHR, SHRM’s manager of workplace trends and forecasting. “In fact, difficulty in recruiting candidates for key jobs was at a four-year high for the month of July in both sectors.”

Other recent SHRM findings show that many HR professionals are having a tough time with talent management and recruitment. A March 2013 SHRM survey revealed that two-thirds (66 percent) of organizations that are currently hiring are having a recruitment challenge, up from 52 percent in 2011. A November 2012 SHRM poll also found that 34 percent of respondents said “remaining competitive in the talent marketplace” would be a top challenge during the next 10 years.

New-Hire Compensation

New-hire compensation for July, however, was relatively unchanged in both sectors from a year ago. In manufacturing a net total of 6.1 percent of respondents reported increasing new-hire compensation in July—down 0.4 points from July 2012. In the service sector a net total of 8.3 percent of companies increased new-hire compensation in July, representing a 2.1-point increase 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 BLS findings on real average hourly earnings, which rose just 0.4 percent in June 2013, compared with June 2012.

It is also consistent with the current economic conditions reported July 17, 2013, by the Federal Reserve in what is widely known as the beige book. All 12 federal districts surveyed reported that “overall economic activity continued to increase at a modest to moderate pace since the previous survey.” And while hiring held steady or increased at a measured pace in most districts, “wage pressures generally remained contained, although some Districts reported modest or moderate wage growth in some sectors.”

Theresa Minton-Eversole is an online editor/manager for SHRM. She can be reached at teversole@shrm.org.

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