SHRM LINE (Leading Indicators of National Employment) Report: February 2014

Approximately two in five manufacturers (47.4 percent) and service-sector companies (44.8 percent) will add jobs in February, though openings varied for the two sectors, according to the latest survey data. Overall, vacancies decreased in manufacturing and increased in services in January, compared with January 2013.

The LINE report examines employers’ hiring expectations, job vacancies, recruiting difficulty and new-hire compensation, 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. 

Employment Expectations, Job Vacancies

“Manufacturing and private service-sector hiring looks like it will be solid in February,” said Jennifer Schramm, GPHR, SHRM’s manager of workforce trends and forecasting. “Reported layoffs are down compared with a year ago, and employment expectations have reached four-year highs for the month.”

With a net of 47.4 percent of manufacturers expecting to add positions in February (52.7 percent will hire; 5.3 percent will cut jobs), the sector’s hiring index will increase by 0.2 points over a year ago. However, a net total of only 13.6 percent of respondents reported more exempt vacancies in January (24.7 percent reported increases; 11.1 percent, decreases), representing a 4.4-point decline from January 2013. Likewise, a net total of 13.2 percent of manufacturers reported that nonexempt vacancies rose in January (28.1 percent saw increases; 14.9 percent, decreases), marking a 4.2-point drop from a year ago.

In the services sector a net of 44.8 percent of respondents said they expect to expand their payrolls in February 2014 (51.1 percent will hire; 6.3 percent will cut jobs), adding 11.7 points to the index from last February. A net total of 18.7 percent of respondents reported more exempt vacancies in January (26.4 percent saw increases; 7.7 percent, decreases), up 6.2 points from January 2013. For nonexempt service positions, a net total of 18.3 percent of businesses had more vacancies in January (26.7 percent reported increases; 8.4 percent, decreases), a 6.5-point jump from a year ago.

For now, “HR professionals are not reporting serious difficulty in filling their organizations’ most strategically important open positions,” added Schramm. A net of 7.6 percent of manufacturing respondents had more difficulty with recruiting in January (a decline of 0.3 points from January 2013), while this was the case for 6.0 percent of service-sector HR professionals (down 2.6 points from a year ago).

New-Hire Compensation

There were few changes in new-hire compensation rates in January, compared with a year ago. In the manufacturing sector, a net total of just 2.3 percent of respondents reported increasing new-hire compensation that month, marking a decline of 5.0 points from January 2013.

By contrast, a net total of 9.3 percent of service-sector companies increased new-hire compensation in January, representing an increase of 2.8 points from a year ago.

Overall, the index’s data show that most organizations are still keeping new-hire compensation rates flat. This is consistent with recent Bureau of Labor Statistics findings on real average hourly earnings, which rose just 0.2 percent in December 2013, compared with December 2012.

If hiring rates improve significantly, however, new-hire compensation can be expected to rise.

“It will be interesting to see if improved hiring rates become a steady trend in 2014 and if this will eventually translate into both more difficulty filling key positions and a boost in the compensation packages being offered to new hires,” said Schramm.

Theresa Minton-Eversole is an online editor/manager for SHRM.

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