Hiring Rates Expected to Reach Four-Year Highs for October

By SHRM Online staff Oct 2, 2014
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Job creation rates are expected to rise in the manufacturing and service sectors in October compared with a year ago, according to the Society for Human Resource Management’s (SHRM’s) Leading Indicators of National Employment (LINE) survey for October 2014.

“The jobs picture looks fairly positive in October, according to HR professionals in both the manufacturing and private service sector,” said Jennifer Schramm, GPHR, manager of SHRM’s workforce trends and forecasting. “Employment expectations for the month are up compared with October 2013.”

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

Employment Expectations

Manufacturing

Service

In October, the hiring rate will rise in manufacturing and services compared with October 2013.



+3.5



+3.4

Recruiting Difficulty

Recruiting difficulty increased in both sectors in September, compared with September 2013.

+3.7



+4.7

New-Hire Compensation

In September, the rate of increase for new-hire compensation rose in manufacturing and services compared with September 2013.

+5.2

+4.3

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

Employment Expectations

In October, manufacturing hiring will increase when compared with October 2013, marking the seventh straight month for increases in this sector. And for the fifth time in six months, service-sector hiring will also increase when compared with last year. Both sectors are expected to reach four-year highs for hiring rates in October.

A net of 45.4 percent of manufacturers will add jobs in October (52.2 percent will hire, 6.8 percent will cut jobs). The sector’s hiring index will rise by 3.5 points compared with a year ago. A net of 40.7 percent of service-sector companies will grow payrolls in October (47.5 percent will hire, 6.8 percent will cut jobs). The index will rise by 3.4 points compared with a year ago.

However, fewer companies had increases in salaried job openings in September compared with a year ago. A net total of 10.7 percent of manufacturers reported increases in exempt vacancies (23.3 percent reported more vacancies, 12.6 percent reported fewer), down 8.6 points from September 2013. In the service sector, a net total of 17.6 percent of respondents reported increases in exempt vacancies for that month (29.6 percent reported more vacancies, 12 percent reported fewer); that’s down 4.5 points from September 2013.

Results were mixed for hourly job openings in September. A net total of 24.6 percent of manufacturing respondents reported that nonexempt vacancies rose in September, a 0.6-point increase from September 2013. In services, a net total of 15.8 percent of respondents reported an increase in nonexempt vacancies in September, down 11.1 points from September 2013.

Recruiting Difficulty

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.

“With many organizations hiring, competition for the best candidates may be heating up,” said Schramm, noting that responding HR professionals reported that recruiting difficulty for candidates for key jobs rose in September. That’s the seventh straight month for such an increase compared with the previous year, she said.

A net of 20.6 percent of manufacturing respondents reported they had more difficulty with recruiting in September, an increase of 3.7 points from September 2013. A net of 22.4 percent of service-sector HR professionals had more difficulty recruiting in September, an increase of 4.7 points from a year ago.

Other SHRM findings show that many HR professionals are still having difficulty with talent management and recruitment. Data to be released by SHRM this fall show that 50 percent of organizations have had difficulty recruiting for key positions in the past 12 months, as have 60 percent of manufacturers.

New-Hire Compensation

“The difficulty filling key jobs may be why rates for some new hires improved in September,” Schramm said. “We saw the new-hire compensation index go up in both manufacturing and services in September compared with a year ago.”

In the manufacturing sector, a net total of 11.5 percent of respondents reported increasing new-hire compensation that month, an increase of 5.2 points from September 2013. In the service sector, a net total of 12 percent of companies increased new-hire compensation in September, up 4.3 points from a year ago.

The index’s data overall show that most organizations are not increasing new-hire compensation, although the net totals in both sectors represented four-year highs for the month of September. Recent U.S. Bureau of Labor Statistics findings showed that real average hourly earnings increased a mere 0.4 percent in August 2014 compared with August 2013.

During the slow-growth recovery from the Great Recession, heightened unemployment and a large pool of job seekers have given many companies the option of holding down the wages and benefits they offer new hires in an ongoing effort to control costs, says Schramm. “If hiring rates improve significantly, new-hire compensation can be expected to increase.”​

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