Manufacturing Hiring Will Surge Again in February; Service Sector Also Strong

News Updates

February manufacturing-sector hiring activity will reach a four-year high, according to the Society for Human Resource Management’s (SHRM) Leading Indicators of National Employment (LINE) survey for February 2013. 

Surveyed manufacturers reported their hiring rates will increase a net of 47.2 percent, while service-sector companies reported a net increase in hiring activity of 33.1 percent for February 2013.

“This is the second month in a row that we have seen hiring expectations at a four-year high in manufacturing,” said Jennifer Schramm, GPHR, manager of SHRM’s workplace trends and forecasting. “The private service sector also looks good, with more HR professionals in this sector saying they are adding jobs than did so at this time last year. And this is the sixth out of the seven previous months that this has occurred.”

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. Together these two sectors employ more than 90 percent of the nation’s private-sector workers.

Source: SHRM Leading Indicators of National Employment,

Employment Expectations

Hiring rates for February will increase in both sectors compared with February 2012, LINE data show. For the seventh consecutive month, the hiring rate reportedly will rise in services compared with the rate for February 2012, and for the sixth time in seven months, the hiring rate will increase in the manufacturing sector compared with a year ago.

A net of 47.2 percent of manufacturers reported they will add jobs in February (56.4 percent will hire; 9.2 percent will cut jobs). The sector’s hiring index will rise in February on a year-over-year basis by a net of 7.0 points. A net of 33.1 percent of service-sector companies reported they will add to payrolls in February (43.5 percent will conduct hiring; 10.4 percent will cut jobs), nearly matching a four-year high for hiring reached in February 2011. The services hiring index will rise by 12.2 points compared with a year ago.

Seasonally adjusted mass layoffs and associated initial claims also fell in December 2012, after a spike in November, according to data released Jan. 25, 2013, by the U.S. Bureau of Labor Statistics (BLS). Mass layoffs and claims had trended upward since August 2012, according to Staffing Industry Analysts data, but the uptick has apparently fallen off. Mass layoffs reached 1,749 in November 2012, increasing 24.9 percent from October, before falling 13.7 percent in December to 1,509.

LINE data compare favorably with reports from the BLS. Several service industries, for example, have posted sizable job gains recently, according to the BLS.

Exempt, Nonexempt Vacancies

Salaried job openings rose in both sectors in January 2013 compared with January 2012. In the manufacturing sector a net total of 18 percent of respondents reported increases in exempt vacancies in January (26.4 percent reported increases; 8.4 percent reported decreases). This represents a 7.6-point increase over the previous January.

In the service sector a net total of 12.5 percent of respondents reported rises in exempt vacancies in January (22.2 percent reported increases; 9.7 percent reported decreases), representing a 3.5-point increase from January 2012.

Hourly-job vacancies also went up in both sectors in January compared with a year ago. A net total of 17.4 percent of manufacturing respondents reported that nonexempt vacancies increased in January (31.1 percent increased; 13.7 percent decreased)—a 4.1-point increase over January 2012. For nonexempt service positions, a net total of 11.8 percent of respondents reported more vacancies in January (23 percent increased, 11.2 percent decreased)—a 4.3-point jump from January 2012.

Monthly nonexempt openings have not followed a specific trend lately when compared with the previous year. HR professionals in both sectors generally have reported 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 in nonexempt vacancies.

“If these hiring rates are sustained, we may begin to see a rise in recruiting difficulty and, eventually, even an impact on wages,” said Schramm. “Right now recruiting difficulty is mixed with a very small decline in manufacturing and a small rise in services. But this could change if hiring continues to pick up the pace. Many of our members are already reporting difficulty filling certain key jobs.”

Recruiting Difficulty

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

A net of 7.9 percent of manufacturing respondents reported they had more difficulty with recruiting in January 2013—a decline of 4.3 points from the previous January. A net of 8.6 percent of service-sector HR professionals also indicated they had more difficulty recruiting in January, an increase of 1.8 points from a year ago and the highest net level of recruiting difficulty in four years for the month of January.

Other recent SHRM survey findings show that many HR professionals are having a tough time with talent management and recruitment. A November 2012 SHRM poll revealed that 34 percent of respondents said “remaining competitive in the talent marketplace” would be a top challenge during the next 10 years. Also, 43 percent of HR professionals said “obtaining human capital and optimizing human capital investments” would be the biggest investment challenge facing their organization during the next decade.

New-Hire Compensation Flat

In January compensation for new hires was relatively flat in both sectors. In the manufacturing sector a net total of 7.3 percent of respondents reported increasing new-hire compensation in January (7.5 percent increased, 0.2 percent decreased). That’s up 0.2 points from January 2012. In the service sector a net total of 6.5 percent of companies increased new-hire compensation in January (7.3 percent increased, 0.8 percent decreased). That represents a 2-point decrease from a year ago.

The flat new-hire compensation rates shown by LINE data are consistent with recent BLS findings on real average hourly earnings, which rose just 0.3 percent in December 2012 compared with December 2011. Several other surveys also have projected minimal increases to salary budgets in 2013, most commonly around 2.5 percent to 3 percent.

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