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Overall U.S. economic conditions are more favorable than a year ago
Job creation rates for November will rise in the manufacturing and service sectors compared with November last year and could reach four-year highs, according to the Society for Human Resource Management’s (SHRM’s) Leading Indicators of National Employment (LINE) survey, released Nov. 6, 2014. Despite recent gains in the U.S. hiring market, however, millions of unfilled positions are impeding the growth potential of some employers, according to other SHRM survey data released last week.
The majority (80 percent) of the more than 3,300 SHRM members polled from Dec. 16, 2013, though Jan. 16, 2014, for SHRM’s 2014 Economic Conditions survey reported their organizations’ overall financial health as either “good” or “excellent.” When asked about the change in overall financial health compared to 12 months ago, 57 percent reported their organizations have experienced either significant or mild improvements—an increase from 51 percent in 2012 and from 42 percent in 2011.
SHRM released the Global Competition and Hiring Strategies and Recruiting and Skills Gaps reports on Oct 30. These are the latest in the larger report entitled SHRM’s Survey Findings: 2014 Economic Conditions—Overall Financial Health and Hiring, a series of survey reports measuring the impact of the U.S. and global recession that began in 2007. The randomly selected HR professionals surveyed represented nine industries. The survey has a margin of error of plus or minus 2 percent.
The LINE Employment Report examines employers’ hiring expectations, job vacancies, difficulty in recruiting top-level talent and new-hire compensation, based on monthly surveys of private-sector human resource professionals at more than 500 manufacturing and 500 service-sector companies. While hiring is expected to increase in November, so too is recruiting difficulty for both sectors. Still, neither hiring rates nor difficulty with recruiting for hard-to-fill positions seems to be making a significant impact on starting salaries, according to this latest report.
“November’s employment expectations data is fairly upbeat,” said Jennifer Schramm, GPHR, SHRM’s manager of workforce trends and forecasting. “Hiring activity will continue to increase as a net of more than two out of five manufacturing and more than one-third of service-sector firms say they’ll be adding to head count.”
The hiring rate for November 2014 will rise in manufacturing and services compared with the same month a year ago.
Recruiting difficulty for October 2014 increased in both sectors compared with October 2013.
The rate of increase for new-hire compensation in October 2014 rose in manufacturing and was nearly unchanged in services compared with a year ago.
Source: SHRM Leading Indicators of National Employment (LINE), www.shrm.org/line
In November, the manufacturing hiring rate is expected to increase compared with the same month last year, marking the eighth straight month of increases for the sector, according to the latest LINE data. A net of 42 percent of manufacturers reported they will add jobs in November (50 percent will hire; 8 percent will cut jobs), representing a 1.6-point rise in the sector’s hiring index compared with a year ago.
For the sixth time in seven months, the November service-sector hiring rate also is expected to increase compared with last year. A net of 37 percent of service-sector companies will grow payrolls in November (45.4 percent will hire; 8.4 percent will cut jobs). The index will rise by 2.9 points compared with a year ago.
The majority of respondents (96 percent) to SHRM’s 2014 Economic Conditions survey reported their organizations have hired full-time regular employees in the past 12 months; 67 percent reported hiring part-time regular employees during the same time frame. In addition, more than half of organizations hired contract/temporary workers (62 percent for full-time positions, 52 percent for part-time jobs).
In October 2014, fewer companies had increases in salaried and hourly job openings compared with a year ago, according to the latest LINE data. A net total of 11.1 percent of manufacturers reported increases in exempt vacancies (24.4 percent reported more vacancies, 13.3 percent reported fewer)—down 6.2 points from October 2013. In the service sector, a net total of 12.8 percent of respondents reported increases in exempt vacancies in October (21.7 percent reported more vacancies, 8.9 percent reported fewer)—down 0.1 points from October 2013.
A net total of only 20.3 percent of manufacturers reported that nonexempt vacancies rose in October—a 0.3-point decline from October 2013. In services, a net total of 15.1 percent of respondents reported an increase in nonexempt vacancies in October—down 3.7 points from October 2013.
One-half of respondents to SHRM’s 2014 Economic Conditions survey said they were having a hard time hiring for their full-time openings. Of those organizations hiring, 48 percent indicated that new, specific skills were required for full-time regular positions they have filled in the past 12 months.
Recruiting difficulty was mentioned most frequently in manufacturing, with 60 percent of respondents citing the problem. The top reasons organizations have experienced difficulty in hiring for full-time regular positions were that candidates lack the needed work experience (50 percent) and the right technical skills (50 percent), as well as competition from other employers (50 percent).
“It is clear that many jobs are not being filled due to a skills mismatch between job seekers and open positions,” said Evren Esen, director of SHRM’s survey programs.
The LINE data show similar recruiting difficulties for the month of October. In fact, for the eighth straight month, both manufacturers and service-sector employers reported that they had more difficulty with recruiting candidates for key jobs than they did last year.
A net of 28 percent of manufacturers said they had more difficulty with recruiting in October—an increase of 10 points from October 2013 and the highest net since May 2006. A net of 30 percent of service-sector respondents said they had more difficulty recruiting in October—an increase of 12.6 points from a year ago and the highest service net since data collection began for that sector in October 2005.
“The positive trend in employment expectations is no doubt a key reason why recruiting difficulty continues to rise,” said Schramm. “It looks like companies are having a harder time filling their jobs of strategic importance, generally those that require higher skills, education or experience.”
Pay rates for new hires were mixed in October, according to LINE; the rate of increase for new-hire compensation rose in manufacturing and fell slightly in services in October compared with a year ago.
In the manufacturing sector, a net total of 13.6 percent of respondents reported increasing new-hire compensation in October—an increase of 8.3 points from October 2013. In the service sector, a net total of 8.3 percent of companies increased new-hire compensation in October—down 0.2 points from a year ago.
The index’s data overall show that most organizations are not increasing new-hire compensation, although the manufacturing net total represented a four-year high for the month of October. Recent Bureau of Labor Statistics findings showed that real average hourly earnings increased 0.3 percent in September 2014 compared with September 2013.
Pressure to increase new-hire compensation might increase in the coming months, however, and not just for the manufacturing and service sectors. Thirty-nine percent of respondents to SHRM’s 2014 Economic Conditions survey noted their organizations have increased salaries, and 33 percent have provided bonuses in the past year.
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