SHRM Leading Indicators of National Employment (LINE)

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August 2016 OverviewManufacturingServices
Employment Expectations: In August, the hiring rate will remain virtually flat in manufacturing and will fall in services compared with a year ago.
+0.3

-7.4
Recruiting Difficulty: In July, recruiting difficulty declined in manufacturing and services compared with a year ago.
-3.8

-1.1
New-Hire Compensation: In July, the index for new-hire compensation fell in both sectors compared with a year ago.
-0.3

-5.0
SOURCE: August 2016 SHRM LINE Report

Employment Expectations     

In August, mixed results for hiring compared with a year ago

In August, job creation rates will vary compared with a year ago, as fewer service-sector companies plan to grow payrolls and slightly more manufacturers will add jobs. Layoff rates will also vary, as fewer manufacturers will cut jobs and more service-sector employers will conduct layoffs.

A net of 46.7 percent of manufacturers will add jobs in August (52.7 percent will hire, 6.0 percent will cut jobs). The sector's hiring index will increase by 0.3 points compared with a year ago. A net of 36.9 percent of service-sector companies will conduct hiring in August (45.8 percent will add jobs, 8.9 percent will cut jobs). The index will fall by 7.4 points compared with a year ago.

The LINE employment expectations index provides an early indication of the U.S. Bureau of Labor Statistics (BLS) Employment Situation report findings. BLS numbers covering the same time period are released approximately one month after the LINE report.

MANUFACTURING SECTOR
Month / YearPercent IncreasingPercent DecreasingNet Increasing
Aug 201356.26.349.9
Aug 201456.36.150.2
Aug 201556.510.146.4
Aug 201652.76.046.7
Annual Change-3.84.10.3
SERVICE SECTOR
Month / YearPercent IncreasingPercent DecreasingNet Increasing
Aug 201341.26.135.1
Aug 201442.26.435.8
Aug 201550.36.044.3
Aug 201645.88.936.9
Annual Change-4.5-2.9-7.4

Recruiting Difficulty     

In July, recruiting difficulty eased in both sectors compared with a year ago

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.

A net of 30.1 percent of manufacturing respondents had more difficulty with recruiting in July, down 3.8 points from July 2015. A net of 26.8 percent of service-sector HR professionals had more difficulty recruiting in July, a decline of 1.1 points from a year ago.

Other SHRM findings show that many HR professionals are still having challenges with talent management and recruitment. More than two-thirds of HR professionals (68 percent) reported challenging recruiting conditions in the current talent market, according to The New Talent Landscape: Recruiting Difficulty and Skills Shortages, a SHRM research report from June 2016. 


MANUFACTURING SECTOR
Month / YearPercent IncreasingPercent DecreasingNet Increasing
July 201323.73.520.2
July 201427.52.525.0
July 201537.03.133.9
July 201631.71.630.1
Annual Change-5.31.5-3.8
SERVICE SECTOR
Month / YearPercent IncreasingPercent DecreasingNet Increasing
July 201320.22.917.3
July 201423.03.419.6
July 201532.54.627.9
July 201630.84.026.8
Annual Change-1.70.6-1.1

New-Hire Compensation

In July, fewer employers increased new-hire compensation compared with a year ago

In the manufacturing sector, a net total of 15.0 percent of respondents reported raising new-hire compensation in July, down 0.3 points from July 2015. In the service sector, a net total of 14.5 percent of companies increased new-hire compensation in July, a decline of 5 points compared with a year ago. 

Many organizations are still keeping new-hire compensation flat, and they may be directing more resources toward benefits as part of compensation packages. July marked the second consecutive month that the new-hire compensation index fell in both sectors when compared with the previous year.

During the economic recovery, heightened unemployment and a large pool of job seekers have allowed many companies to hold down the wages and benefits they offer new hires in order to control costs. Compensation typically improves as hiring increases, but job creation has not risen to the point where wage growth has improved on a widespread basis.


MANUFACTURING SECTOR
Month / YearPercent IncreasingPercent DecreasingNet Increasing
July 20137.81.76.1
July 201410.01.28.8
July 201516.10.815.3
July 201615.40.415.0
Annual Change-0.70.4-0.3
SERVICE SECTOR
Month / YearPercent IncreasingPercent DecreasingNet Increasing
July 20138.80.58.3
July 201413.61.312.3
July 201520.61.119.5
July 201615.91.414.5
Annual Change-4.7-0.3-5.0

Vacant Positions in Exempt Employment

In July, fewer employers report increases in salaried job openings

Vacancies are defined as open positions that employers are actively trying to fill. LINE data cover exempt vacancies, or primarily salaried positions, and nonexempt vacancies, which are mostly hourly jobs. Changes in the number of job vacancies can be one of the earliest indicators of a shift in the balance between labor supply and demand. Typically, exempt employment fluctuates by smaller rates than nonexempt employment during economic downturns and expansions.

In July, a net total of 10.8 percent of manufacturers reported increases in exempt vacancies (21.8 percent reported more vacancies, 11.0 percent reported fewer), down 2.8 points from July 2015. In the service sector, a net total of 11.0 percent of respondents reported increases in exempt vacancies in July (20.6 percent reported more vacancies, 9.6 percent reported fewer), down 4.4 points from July 2015.


MANUFACTURING SECTOR
Month / YearPercent IncreasingPercent DecreasingNet Increasing
July 201331.312.418.9
July 201427.511.216.3
July 201527.213.613.6
July 201621.811.010.8
Annual Change-5.42.6-2.8
SERVICE SECTOR
Month / YearPercent IncreasingPercent DecreasingNet Increasing
July 201325.416.68.8
July 201428.611.017.6
July 201526.811.415.4
July 201620.69.611.0
Annual Change-6.21.8-4.4

Vacant Positions in Nonexempt Employment

In July, mixed results for changes in hourly job openings

In contrast to exempt employment, nonexempt employment typically changes by a greater percentage during economic downturns and expansions.

A net total of 24.4 percent of manufacturing respondents reported that nonexempt vacancies rose in​ July, a 3.7-point decrease from July 2015. In services, a net total of 27.3 percent of respondents reported an increase in nonexempt vacancies in July, up 5.9 points from July 2015.
 
Monthly nonexempt openings have not followed a specific trend recently when compared with the previous year; HR professionals in both sectors have generally reported increases in job openings within the month of each LINE survey. For every month since September 2009 – shortly after the end of the Great Recession – the manufacturing and service sectors have reported a net increase for nonexempt openings. 

MANUFACTURING SECTOR
Month / YearPercent IncreasingPercent DecreasingNet Increasing
July 201334.615.419.2
July 201436.112.323.8
July 201539.211.128.1
July 201635.010.624.4
Annual Change-4.20.5-3.7
SERVICE SECTOR
Month / YearPercent IncreasingPercent DecreasingNet Increasing
July 201332.616.715.9
July 201434.212.621.6
July 201535.814.421.4
July 201637.610.327.3
Annual Change1.84.15.9

About This Report

The LINE Report examines four key areas: employers' hiring expectations, new-hire compensation, difficulty in recruiting top-level talent and job vacancies. It is based on a monthly survey of private-sector human resource professionals at more than 500 manufacturing and 500 service-sector companies. Together, these two sectors employ more than 90 percent of the nation's private-sector workers.


Inquiries
Jennifer Schramm, SHRM-SCP, M. Phil., manager, Workforce Trends and Forecasting, SHRM: Jennifer.Schramm@shrm.org

Joseph Coombs, senior analyst, Workforce Trends and Forecasting, SHRM: Joseph.Coombs@shrm.org

Steven Director, Ph.D., economic advisor for SHRM LINE, Rutgers University: Steven.Director@Rutgers.edu

Disclaimer 
© 2016 Society for Human Resource Management. Permission is granted to copy this work with appropriate attribution to copyright owners. All content is for informational purposes only and is not to be construed as a guaranteed outcome. SHRM cannot accept responsibility for any errors or omissions, or any liability resulting from the use or misuse of any such information.


Need data on what’s really happening in the job market? The SHRM LINE Employment Report covers the service and manufacturing sectors on key areas for recruiting each month. 

  • LINE is the only national employment indicator that includes hiring expectations for the month ahead – released one month earlier than the Bureau of Labor Statistics (BLS) Employment Situation Report covering the same period.
  • LINE provides the only published index of changes in new-hire compensation.
  • LINE includes the only published measure of recruiting difficulty of highly qualified candidates for the most critical positions.

Do you have your SHRM-CP or SHRM-SCP? Earn up to 20 PDCs by using LINE data to advance your organization. Refer to page 10 of the recertification handbook.

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CONTACTS

For questions on LINE® data please contact SHRM Research at (703) 535-6301 or LINE@shrm.org. Members of the media should contact SHRM Media Affairs at (703) 535-6273, 703-535-6072, or press@shrm.org.

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