In September 2012, for the second consecutive month, the hiring rate will rise in the manufacturing and service sectors compared with a year earlier, according to results from the latest Society for Human Resource Management’s (SHRM) Leading Indicators of National Employment (LINE) survey.
The LINE report examines three key areas: employers’ hiring expectations and job vacancies; new-hire compensation; and difficulty in recruiting top-level talent. 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), www.shrm.org/line
The LINE results for September 2012 reflect an ongoing trend of steady job growth each month, but also reveal a pace that is not strong enough to bring down the nation’s continuing high unemployment rate. Still, HR professionals are reporting a net increase in hiring expectations in September compared with September 2011.
Approximately 40 percent of respondents representing the manufacturing industry say they will add jobs in September; nearly one-quarter (24.8 percent) of respondents representing the service sector plan to hire. Moreover, layoff rates in both sectors are at a four-year low for the month of September.
A net of 40.8 percent of manufacturers will add jobs in September (49.2 percent will hire, 8.4 percent will cut jobs). The sector’s hiring index will rise in September on a year-over-year basis by a net of 12.4 points. A net of 24.8 percent of service-sector companies will add jobs in September (31.8 percent will hire vs. 7.0 percent that will trim payrolls). The service sector hiring index will rise by 2.7 points compared with a year ago.
“Though the employment expectations indices this month are at least pointing in the right direction, there has not been a long-term pattern of strong monthly increases in hiring expectations,” said Jennifer Schramm, GPHR, manager of SHRM’s Workplace Trends and Forecasting program. “Job growth might, therefore, continue to be fairly subdued.”
In seven of the past 12 months, manufacturing hiring has trailed the previous year’s rate, according to LINE data. During that same period, service-sector hiring fell behind the previous year’s rate in 10 of 12 months.
Exempt, Nonexempt Vacancies
Salaried job openings fell in manufacturing and rose in services in August 2012 compared with August 2011. In the manufacturing sector, a net total of 12.0 percent of respondents reported increases in exempt vacancies in August (23.1 percent reported increases, 11.1 percent reported decreases)—an 11-point decrease from August 2011. In the service sector, a net total of 15.4 percent of respondents reported increases in exempt vacancies in August (25.3 percent reported increases, 9.9 percent reported decreases)—a 9.2-point increase from August 2011.
Hourly job vacancies declined in both sectors in August 2012 compared with August 2011. A net total of 16.8 percent of manufacturing respondents reported that nonexempt vacancies increased in August (29.6 percent increased, 12.8 percent decreased). This represents a 4.3-point decrease from August 2011. For nonexempt service positions, a net total of 13.5 percent of respondents reported increased vacancies in August (23.7 percent increased, 10.2 percent decreased). This marks a 0.3-point decline from August 2011.
Monthly nonexempt openings have not followed a specific trend lately when compared with the previous year; HR professionals in both sectors generally 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.
LINE’s recruiting difficulty index measures how difficult it is for firms to recruit candidates to fill the positions of greatest strategic importance to their companies. Overall, this month’s LINE results reinforce that while hiring remains sluggish, recruiting qualified, skilled workers is tough.
A net of 17.9 percent of manufacturing respondents had more difficulty with recruiting in August 2012. This is an increase of just 0.1 point from August 2011, but stands as the highest net of recruiting difficulty in manufacturing in four years in August. A net of 9.7 percent of service-sector HR professionals had more difficulty recruiting in August, a decline of 1.8 points from a year ago.
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. Data from the same survey revealed that 57 percent of professional services companies that were hiring full-time workers were also having difficulty recruiting for job openings.
However, “without ongoing strong demand, recruiting difficulty is not likely to increase significantly,” Schramm said. “The August  LINE data show the recruiting difficulty indices for both sectors relatively unchanged, rising only minimally in manufacturing and falling slightly in services compared with a year ago.”
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. If hiring rates improve significantly, new-hire compensation can be expected to increase. But that scenario won’t play out in September 2012, according to the latest LINE data.
“The LINE new-hire compensation index fell slightly in August 2012 in both manufacturing and services, indicating that most employers are under little pressure to raise the wages they are offering new hires,” Schramm said.
In the manufacturing sector, a net total of 7.8 percent of respondents reported increasing new-hire compensation in August (8.3 percent increased, 0.5 percent decreased). That is a 0.7-point decrease from August 2011. In the service sector, a net total of 8.1 percent of companies increased new-hire compensation in August (9.3 percent increased, 1.2 percent decreased). That represents 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 Bureau of Labor Statistics findings on real average hourly earnings, which rose just 0.2 percent in July 2012 compared with July 2011. Several other surveys also have projected minimal increases to 2013 salary budgets, noting expected averages around 2.5 percent to 3 percent.
Theresa Minton-Eversole is an online editor/manager for SHRM. To read the original article, please click here.