LINE: Employers Expect to Add Jobs in October 2012

News Updates

For the third consecutive month, more HR professionals in the manufacturing and service sectors report that their organizations will be hiring in October 2012 compared with October 2011, according to the Society for Human Resource Management’s (SHRM) Leading Indicators of National Employment (LINE) survey, released Oct. 4, 2012. Likewise, seasonal job gains are likely to be slightly higher than a year ago but still below pre-recession levels, according to the annual holiday hiring forecast released Sept. 24 by Challenger, Gray & Christmas Inc.

The LINE Employment Report examines four key areas: employers’ hiring expectations, job vacancies, difficulty in recruiting top-level talent and new-hire compensation. It is based on a monthly survey of private-sector human resource professionals at more than 500 manufacturing and 500 service-sector companies.

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

Employment Expectations, Job Vacancies

The LINE results for October 2012 reflect an ongoing trend of steady job growth, with hiring rates expected to rise in the manufacturing and service sectors.

“Slightly more HR professionals are reporting that their organizations are hiring compared with the same time last year,” said Jennifer Schramm, GPHR, manager of SHRM’s workplace trends and forecasting program. “While more than one in three manufacturers and service-sector companies say they will add jobs in October, the pace of hiring in recent months has not been enough to make much of a dent in the unemployment rate.”

In seven 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 nine of 12 months.

However, a net of 34.6 percent of manufacturers will add jobs in October 2012 (49.8 percent will hire, 15.2 percent will cut jobs). The sector’s hiring index will rise in October on a year-over-year basis by a net of 4.2 points.

A net of 33.9 percent of service-sector companies will add jobs in October 2012 (40.4 percent will conduct hiring, 6.5 percent will trim payrolls), and the service hiring index will rise by 4.9 points compared with October 2011.

Unfortunately, the layoff rate will rise in manufacturing in October, as well; layoffs are expected to fall in the services sector in October compared with October 2011.

Salaried job openings fell in manufacturing but rose in services in September 2012 compared with September 2011, according to this month’s LINE data. By contrast, hourly job vacancies, or nonexempt positions, rose in manufacturing and fell in services in September compared with a year ago. 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 9.1 percent of respondents reported increases in exempt vacancies in September (22.5 percent reported increases, 13.4 percent reported decreases). This represents a 1.3-point decrease from September 2011. In the service sector, a net total of 16.7 percent of respondents reported increases in exempt vacancies in September (29.6 percent reported increases, 12.9 percent reported decreases). That is a 9.3-point increase from September 2011.

A net total of 25.5 percent of manufacturing respondents reported that nonexempt vacancies increased in September (35.8 percent increased, 10.3 percent decreased). This represents a 14.3-point increase from September 2011. For nonexempt service positions, a net total of 13.7 percent of respondents reported increased vacancies in September (27.9 percent increased, 14.2 percent decreased), marking a 4.3-point decline from September 2011.

Monthly nonexempt openings have not followed a specific trend lately when compared with the previous year, said Schramm. Generally, HR professionals in both sectors have reported having 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.

Recruiting Difficulty

LINE’s recruiting difficulty index measures how challenging it is for firms to recruit candidates to fill the positions of greatest strategic importance to their companies.

A net of 16.1 percent of manufacturing respondents reported they had more difficulty with recruiting in September 2012, an increase of 6.4 points from September 2011. This stands as the highest net recruiting difficulty in manufacturing in four years for the month of September. A net of 7.8 percent of service-sector HR professionals reported they had more difficulty recruiting in September, a decline of 3.8 points from a year ago.

Other recent SHRM research findings also show that many employers are 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. Data from the same survey revealed that 57 percent of professional services companies that were hiring full-time workers were having difficulty recruiting for job openings, as well.

“Recruiting difficulty is somewhat mixed right now,” said Schramm. “While finding the right people for key jobs was slightly more difficult in September for manufacturing organizations, it eased slightly in services compared with a year ago.”

New-Hire Compensation

Following the pattern of previous months, new-hire compensation didn’t budge much in September in either sector. This is not surprising given the still slow job market, Schramm said.

“During the recession, a high rate of unemployment and a large pool of job seekers in the market gave many companies the option of holding down the wages and benefits they offered new hires in an ongoing effort to control costs,” Schramm explained. “If hiring rates improve significantly, new-hire compensation can be expected to increase.”

This is not likely to happen soon. In the manufacturing sector, a net total of 10 percent of respondents reported increasing new-hire compensation in September 2012 (10.6 percent increased, 0.6 percent decreased) for a 1.3-point increase from September 2011. In the service sector, a net total of 5.1 percent of companies increased new-hire compensation in September (5.5 percent increased, 0.4 percent decreased), representing a 2.8-point decrease 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 BLS findings on real average hourly earnings, which were unchanged in August 2012 compared with August 2011. Several other surveys have projected minimal increases to salary budgets in 2013, also, most commonly between 2.5 percent to 3 percent.

Theresa Minton-Eversole is an online editor/manager for SHRM.  To view the original article, please click here.