What’s Next for the Job Market in 2016?

By Joseph Coombs Jul 8, 2016
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The U.S. economy continues to add jobs, albeit at a slower rate in the past few months. Decreased demand is partially to blame and perhaps comes as no surprise, as some return to moderation was expected after the recent stretch of fast-paced job growth. Simply put, conditions have tightened as more people have found work and there are fewer openings in many employment sectors.​

​But a tug-of-war continues between the available labor pool and hiring managers who can't seem to fill certain vacancies, according to The New Talent Landscape: Recruiting Difficulty and Skills Shortages, a report released June 20 by the Society for Human Resource Management (SHRM). More than two-thirds (68 percent) of HR professionals said they are having a hard time recruiting candidates for full-time positions. There are many reasons for their struggles—half of HR professionals (50 percent) said that candidates don't possess the needed work experience, for example.

About one-third (34 percent) of respondents said their organizations' salaries are not competitive for the market, and job seekers are letting them know about it. More than 1 in 5 (23 percent) HR professionals said they're struggling to fill openings because candidates are rejecting the compensation package.

Yet while it is clear that job creation has slowed, there are still opportunities for those seeking work. Here are several projections and status reports for the labor market:

*Pay rates for new hires are not improving dramatically, according to data from SHRM's Leading Indicators of National Employment (LINE) report for July 2016. Many organizations are still keeping new-hire compensation flat, and they may be directing more resources toward benefits as part of compensation packages. June 2016 marked the first month since May 2014 that LINE's new-hire compensation index fell in both the manufacturing and service sectors when compared with the previous year.

*Federal Reserve Board members and Federal Reserve Bank presidents, in a set of projections released June 21, 2016, had varying opinions that called for the unemployment rate to range from 4.5 percent to 4.9 percent for the remainder of 2016, and from 4.3 percent to 4.8 percent in 2017. The labor market continues to send mixed signals, according to a statement released by the Fed from the June 21 meeting: "All told, the latest readings suggest that labor markets are tighter than they were at the end of last year but that the pace of improvement has slowed. Whether those signs of slowing will be confirmed by subsequent data, and how persistent any such slowing will be, remains to be seen."

*U.S. employers have "stable hiring plans" for the third quarter of 2016, according to results of the Manpower Employment Outlook Survey released June 14. A net of 15 percent of organizations told Manpower that they would grow payrolls during the July-to-September time frame, down slightly from 16 percent in the second quarter of 2016. "Although employers have been increasingly cautious for the last three quarters, the U.S. hiring outlook is among the strongest globally, and we expect to see modest improvements in the labor market throughout most of the country," said Kip Wright, senior vice president of Manpower in North America.

*Roughly 1 out of 5 chief information officers (21 percent) said they plan to expand their technology staff in the second half of 2016, according to a survey released June 21 by staffing services company Robert Half International. However, many employers are still having difficulty filling vacancies, according to a Robert Half executive. "Organizations are getting the green light on more technology projects, prompting them to make strategic hires," said John Reed, senior executive director of Robert Half Technology. "However, technology leaders continue to struggle to find highly skilled talent in a market with low unemployment. They seek IT professionals with specialized skills, especially in the areas of cloud computing, data analytics, mobile strategies and cybersecurity."

*Manufacturing employment is expected to remain unchanged on average for the remainder of 2016, but industry revenues are expected to increase 2.4 percent, according to a forecast released May 18 from the Institute for Supply Management, a Tempe, Ariz.-based organization that promotes the practice of supply chain management. From that same survey, nonmanufacturers said they expect employment to increase 0.7 percent for the remainder of 2016, and for revenues to increase by 2.4 percent.

Joseph Coombs is a senior analyst for workforce trends at SHRM.

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