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Service-Sector, Manufacturing Hiring Expected to Continue in May 
Both sectors experience marginal year-over-year increases 

5/2/2013  By Theresa Minton-Eversole 
 
 
The May 2013 hiring rate is expected to rise in the service and manufacturing sectors compared with a year ago, according to the Society for Human Resource Management’s (SHRM) Leading Indicators of National Employment (LINE) survey for May 2013. 

Employers will continue to expand payrolls in May, with a net of 42.9 percent of manufacturers and a net of 37.1 percent of service-sector companies reporting they will add jobs, according to SHRM’s monthly survey of private-sector human resource professionals at more than 500 manufacturing and 500 service-sector companies. However, the rate of increase in new-hire compensation has remained basically unchanged in manufacturing and services compared with a year ago, as has the difficulty of recruiting candidates for manufacturing jobs.

The LINE Employment Report examines four key areas: employers’ hiring expectations, new-hire compensation, difficulty in recruiting top-level talent, and job vacancies. 

Employment Expectations

Manufacturing

Service

The hiring rate for May 2013 will rise slightly in both the manufacturing and service sectors compared with May 2012.

+2.4

 

+6.7

Recruiting Difficulty

 

 

In April 2013 recruiting difficulty fell in manufacturing and rose in services compared with April 2012.

 -3.5

 +13.6

New-Hire Compensation

 

 

In April 2013 the rate of increase for new-hire compensation was mainly unchanged in both sectors compared with April 2012.

 +0.3

 

 -1.2

Source: SHRM Leading Indicators of National Employment (LINE), shrm.org/line.

Employment Expectations

For the 10th consecutive month, HR professionals in the services sector report a net rise in employment expectations that marks a slight increase compared with a year ago, while those in the manufacturing sector report a lesser year-over-year change. The service sector’s hiring index will rise by 6.7 points in May 2013 compared with May 2012, with 46.5 percent of respondents reporting they will hire and 9.4 percent indicating they will cut jobs. The manufacturing sector’s hiring index will rise in May on a year-over-year basis by 2.4 points, with 52.3 percent of respondents reporting they will hire and 9.4 percent reporting they will cut jobs.

“Hiring rates are not yet at a level where they are having a significant impact on recruiting difficulty or putting upward pressure on new-hire compensation in manufacturing,” Jennifer Schramm, GPHR, SHRM’s manager of workplace trends and forecasting, said in an e-mail about the latest LINE results. “However, more HR professionals in services reported a year-over-year increase in recruiting difficulty compared with a year ago, and exempt vacancies are also up in this sector.”

There were more salaried job openings in both sectors in April 2013 compared with April 2012. In the manufacturing sector a net total of 22.7 percent of respondents reported increases in exempt vacancies this April (29 percent reported increases; 6.3 percent reported decreases), representing a 5-point increase from April 2012. In the service sector a net total of 13.4 percent of respondents reported increases in exempt vacancies (23.4 percent reported increases; 10 percent reported decreases), representing a 6.9-point jump from a year ago.

Meanwhile, hourly-job vacancies increased in April in manufacturing and fell slightly in the services sector. A net total of 34.1 percent of manufacturing respondents reported that nonexempt vacancies rose this April (39.9 percent reported increases; 5.8 percent reported decreases), representing a 14.1-point increase from a year ago. For nonexempt service positions, a net total of 24.4 percent of respondents reported more vacancies in April 2013 (33.5 percent reported increases; 9.1 percent reported decreases), a 0.3-point decline from last April.

Monthly nonexempt openings have not followed a specific trend lately when compared with the previous year, but both sectors have seen a net increase in these vacancies in every month since September 2009, or shortly after the end of the Great Recession.

Recruiting Difficulty, New-Hire Compensation

A net of 12.6 percent of manufacturing respondents reported having more difficulty in recruiting candidates for key positions in April 2013, representing a decline of 3.5 points from a year ago. A net of 11.9 percent of service-sector HR professionals reported having a harder time recruiting key candidates in April—an increase of 13.6 points from a year ago and the highest net level of recruiting difficulty in four years for the month of April.

Other recent SHRM findings reveal that many HR professionals are having difficulty with talent management and recruitment. A March 2013 SHRM survey addressing recruiting and skills gaps showed that two-thirds (66 percent) of organizations that are currently hiring are having a difficult time recruiting, up from 52 percent in 2011. A November 2012 SHRM poll also found that 34 percent of respondents said “remaining competitive in the talent marketplace” would be a top challenge in the next 10 years.

But this level of recruiting difficulty is not having a significant impact on new-hire compensation overall. In April 2013 the rate of increase for new-hire compensation changed minimally in both sectors.

In the manufacturing sector a net total of 8 percent of respondents reported increasing new-hire compensation in April 2013, up only 0.3 points from a year ago. In the service sector a net total of 7.9 percent of companies increased new-hire compensation in April 2013, representing a 1.2-point decrease from last April.

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 rose just 0.3 percent in March 2013 compared with March 2012. Several other surveys have also projected minimal increases to salary budgets this year, most commonly around 2.5 percent to 3 percent.

“A high rate of unemployment and a large pool of job seekers in the market give many companies the option of holding down the wages and benefits they offered new hires,” Schramm said. “If hiring rates improve significantly, new-hire compensation will increase.”

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

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