Slow Summer Job Growth Expected to Continue

News Updates

Hiring is not expected to ramp up significantly in July in the manufacturing and service sectors, according to the Society for Human Resource Management’s (SHRM) Leading Indicators of National Employment (LINE) survey for July 2012. 

A net of 36.7 percent of surveyed manufacturers and 24.1 percent of service-sector companies reported they will add jobs in July 2012. Meanwhile, LINE data show new-hire compensation rose in manufacturing and fell in services compared with June 2011. The LINE report examines four key areas: employers’ hiring expectations, job vacancies, difficulty in recruiting top-level talent and new-hire compensation.

“Unfortunately, the trend of low job growth we’ve experienced in recent months does not look like it will let up in July [2012],” said Jennifer Schramm, GPHR, manager of SHRM’s workplace trends and forecasting program. “HR professionals are not expecting to ramp up hiring to any great extent in either the manufacturing or service sectors,” she said.

Source: SHRM Leading Indicators of National Employment (LINE),

Employment Expectations

In manufacturing, 44.7 percent of employers will hire new workers while 8.0 percent will cut jobs in July 2012. The sector’s hiring index will rise in July 2012 on a year-over-year basis by a net of 2.0 points. In service-sector companies, 28.8 percent of companies will conduct hiring and 4.7 percent will trim payrolls in July 2012, and the service hiring index will fall by 17.4 points compared with July 2011. The layoff rate, however, will fall in both sectors in July 2012 compared with July 2011.

The LINE results for July 2012 reflect an ongoing trend of steady job growth each month but also reveal a pace that has not kept up with rates from the previous year, Schramm said. In nine of the past 12 months, manufacturing hiring has trailed the previous year’s rate, according to LINE data. During that same time period, service-sector hiring fell behind the previous year’s rate in all 12 months.

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. In the manufacturing sector, a net total of 19.1 percent of respondents reported increases in exempt vacancies in June 2012 (26.0 percent reported increases, 6.9 percent reported decreases), representing a 3.2-point increase from June 2011. In the service sector, a net total of 6.4 percent of respondents reported increases in exempt vacancies in June 2012 (14.0 percent reported increases, 7.6 percent reported decreases), a 2.7-point increase from June 2011.

Still, hourly job vacancies fell in both sectors in June 2012 compared with June 2011. A net total of 18.2 percent of manufacturing respondents reported that nonexempt vacancies increased in June 2012 (29.6 percent increased, 11.4 percent decreased), representing a 6.5-point decrease from June 2011. For nonexempt service positions, a net total of 7.7 percent of respondents reported increased vacancies in June 2012 (18.6 percent increased, 10.9 percent decreased). This marks a 13.4-point decrease from June 2011.

Monthly nonexempt openings have not followed a specific trend lately when compared with the previous year, but HR professionals in both sectors have generally reported having increases in job openings within the month of each LINE survey, said Schramm. 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.

Recruiting Difficulty

HR professionals in the manufacturing sector said that recruiting difficulty of key candidates rose slightly in June 2012. The year-over-year change in the service sector’s recruiting difficulty for June 2012 showed a drop, reflecting a subdued job market.

A net of 15.0 percent of manufacturing respondents had more difficulty with recruiting in June 2012. This is an increase of 0.7 points from June 2011 and the highest net of recruiting difficulty in manufacturing in four years in June.

A net of 3.0 percent of service-sector HR professionals had more difficulty recruiting in June 2012, a decline of 14.4 points from June 2011. This marked only the fifth time that service-sector recruiting difficulty has fallen on an annual basis since November 2009, according to LINE data.

Other recent SHRM findings show that many employers are still having trouble matching the skills of job seekers with open positions. An April 2012 SHRM survey showed that 68 percent of manufacturers who were hiring full-time workers were having difficulty finding qualified candidates for those jobs.

New-Hire Compensation

In June 2012, more manufacturers increased compensation for new hires compared to June 2011, according to LINE data. If hiring rates improve significantly, new-hire compensation can be expected to increase.

In the manufacturing sector, a net total of 11.7 percent of respondents reported increasing new-hire compensation in June 2012 (12.0 percent increased, 0.3 percent decreased). That is a 4.9-point increase from June 2011 and the highest net in four years for manufacturing in June.

In the service sector, a net total of 8.1 percent of companies increased new-hire compensation in June 2012 (9.7 percent increased, 1.6 percent decreased). That represents a 0.6-point decrease from June 2011.

Overall, the index’s data show that most organizations are still keeping new-hire compensation rates flat. This is consistent with recent U.S. Bureau of Labor Statistics findings on real average hourly earnings, which fell 0.1 percent in May 2012 compared with May 2011. Several private surveys also have shown minimal increases to salary budgets in 2012, most commonly around 3 percent.