SHRM/Rutgers LINE® Index Forecasts Soft Labor Market for May 2008

For Immediate Release

Apr 22, 2008
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Alexandria, Va. ─ HR professionals who recruit and hire employees across the country say manufacturing and service sector hiring will drop sharply in May 2008 compared with one year ago.

Their responses are summarized in the latest numbers from the SHRM/Rutgers Leading Indicators of National Employment® (LINE®).

LINE data also show that increases in wages for new hires in the manufacturing sector dropped modestly in April compared to one year ago while those in the service sector fell slightly.

“HR professionals tell us that the job slowdown will likely continue into May,” said Jennifer Schramm, SHRM manager of workplace trends and forecasting. “Firms in both the manufacturing and service sectors have significantly lower expectations when it comes to hiring compared with this time last year,” said Schramm.

“For employers looking to fill positions, especially in the service sector, recruitment looks like it is becoming easier than it has been over the last few years,” added Schramm. “The recruiting difficulty index for the service sector was at the lowest April level since the series was initiated in 2005,” she said. “Employers in the manufacturing sector are also having an easier time finding highly qualified new workers compared to one year ago,” said Schramm.

These are the findings of the May 2008 LINE employment report, a set of economic indicators that forecast changes to four national employment measures: job expectations, job vacancies, new-hire compensation and recruitment difficulty. 

LINE provides the only published index of new-hire compensation and recruiting difficulty. Additionally, the LINE employment expectations index is an early indication of the monthly Bureau of Labor Statistics (BLS) report, which is released five weeks later. The LINE survey uses a broad sample of firms from the manufacturing and private service sectors. Those two sectors make up more than 90 percent of America’s private sector employment.

Manufacturing Sector

The LINE index of manufacturing employment expectations dropped 13.2 points compared with May 2007. This index declined from 43.2 in May 2007 to 30.0 in May 2008.

A look at exempt and nonexempt vacancies shows similar patterns — a drop — to those reported one year ago. Employers reported a lower vacancy rate index among exempt manufacturing jobs for April, the month leading into the May forecast — 16.3 during April 2007 compared with 9.4 in April 2008.

The April 2008 vacancy rate index of nonexempt manufacturing jobs is also lower than it was in April 2007 —17. 2 compared with 12.5.

The May 2008 LINE recruiting difficulty index dropped substantially from April 2007 — 18.3 in April 2007 compared with 6.3 in April 2008.

Compensation dropped for new hires in the manufacturing sector. The manufacturing new-hire compensation index for April 2008 dropped to 7.8 from 10.0 in April 2007.

Service Sector

In the service sector, the LINE index of employment expectations dropped 16.5 points from May 2007 to May 2008 (52.0 compared with 35.5). In May 2007, private service-sector employment rose by 165,000 jobs on a seasonally adjusted basis and by 686,000 jobs on a not seasonally adjusted basis.

The service-sector exempt employment vacancy index dropped from 7.0 in April 2007 to 3.3 in April 2008 while the nonexempt employment vacancy index plummeted, from 27.0 in April 2007 to 11.4 in April 2008.

The recruiting difficulty index, too, fell sharply from 16.4 in April 2007 down to -10.5 in April 2008.

The new-hire compensation index also decreased, slightly, from a year ago from 13.0 in April 2007 to 12.6 in April 2008.

About LINE

The SHRM/Rutgers LINE indicator of employment expectations provides an early snapshot of anticipated U.S. hiring for the same April time period as the report the BLS will release in May. The monthly report forecasts changes in national employment by surveying human resource professionals at more than 500 manufacturing and 500 service sector firms. Responses in the LINE survey are weighted using the proportion of total employment represented by the respondent’s industry.

The LINE report is a collaborative effort between the Society for Human Resource Management (SHRM) and the Rutgers University School of Management and Labor Relations. The SHRM/Rutgers LINE report began forecasting manufacturing sector hiring trends four years ago and service sector three years ago.

The figure below shows how the LINE employment index, in red, has correlated with the BLS numbers, which are released five weeks later. To view the full report, visit www.shrm.org/LINE

About the Society for Human Resource Management

The Society for Human Resource Management (SHRM) is the world’s largest association devoted to human resource management. Representing more than 250,000 members in over 140 countries, the Society serves the needs of HR professionals and advances the interests of the HR profession. Founded in 1948, SHRM has more than 575 affiliated chapters within the United States and subsidiary offices in China and India. Visit SHRM Online at www.shrm.org.

School of Management and Labor Relations at Rutgers

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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