June Job Market Shows Slowing Employment Growth in Manufacturing Sector

For Immediate Release

May 22, 2007
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Service-Sector Growth Slightly Stronger than in June 2006

(Alexandria, Va., May 22, 2007)—According to new numbers from the Leading Indicator of National Employment® (LINE™), manufacturing hiring will be much weaker in June 2007 than it was in June 2006. Within the larger service sector, growth will be just slightly stronger than in June 2006. LINE™ is a collaborative effort between the Society for Human Resource Management (SHRM) and the Rutgers University School of Management and Labor Relations.

This LINE™ employment expectations report references the same June period as the report the Bureau of Labor Statistics (BLS) will release on July 6, 2007. The responses in the LINE™ survey are weighted using the proportion of total employment represented by the respondent’s industry.

Compared with a year ago, new-hire compensation is rising more slowly within manufacturing, but more rapidly within the service sector. The number of vacant positions that employers are actively trying to fill is rising rapidly within the exempt manufacturing sector, but it has dropped significantly in the exempt service sector and in the nonexempt manufacturing and service sectors. Recruiting difficulty increased in the service sector, but eased in manufacturing compared with a year ago. In both sectors, recruiting difficulty remains a major concern.

The indicator reports on four employment measures: job expectations, job vacancies, new-hire compensation and recruitment difficulty. The LINE™ employment expectations index has consistently provided an early indication of the upcoming BLS numbers. The LINE™ “net increasing index” is calculated by taking the percentage increasing minus the percentage decreasing.

Manufacturing

The employment expectations index rose from 43.2 in May 2007 to 46.8 in June 2007. By comparison, the June 2007 index (46.8) is still substantially below the June 2006 index (52.8). Within manufacturing, the new-hire compensation index for May 2007 is well below the level of a year ago (9.8 versus 12.4). This is consistent with the slower manufacturing employment growth. The May 2007 exempt vacancy index is well above (23.5 versus 13.6) and the non-exempt vacancy index is below (14.0 versus 25.3) the levels of May 2006. With fewer vacant positions and fewer exempt and non-exempt vacancies within manufacturing, the May 2007 recruiting difficulty index (20.8) is well below the level of May 2006 (32.0).

Service

Slightly more service-sector firms expect to expand their workforce in June 2007 than in June 2006 (68.5 percent versus 66.0 percent). The new-hire compensation index (17.7) is significantly above the level of a year ago (8.5). This is consistent with more rapid service-sector employment growth. Within the service sector, both the exempt and non-exempt vacancy indices fell substantially from 10.7 in May 2006 to -0.2 in May 2007 for exempt service-sector workers and from 27.8 in May 2006 to 6.8 in May 2007 for nonexempt workers. The May 2007 recruiting difficulty index (19.0) is well above the level of May 2006 (8.0).

The LINE™ index is an economic indicator that identifies early economic trends and changes in the national job market by surveying human resource (HR) executives at manufacturing and service-sector firms. The indicator is released at 8:30 am ET on the fourth Tuesday of each month.

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The Society for Human Resource Management (SHRM) is the world’s largest association devoted to human resource management. Representing more than 210,000 individual members, the Society’s mission is both to serve human resource management professionals and to advance the profession. Founded in 1948, SHRM currently has more than 550 affiliated chapters within the United States and members in more than 100 countries. Visit SHRM Online at www.shrm.org.

The School of Management and Labor Relations at Rutgers, the State University of New Jersey, is a leading center of scholarly and applied research on human resource management issues. The school creates and disseminates knowledge that fosters a better understanding of the nature of employment and work in modern society. The Rutgers Master of Human Resource Management degree is one of the top human resource management programs in the nation.

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