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Sizable Service-Sector Hiring Increase Expected in April
 

By Theresa Minton-Eversole  4/4/2013
 
The service-sector hiring rate will reach a four-year high for the month of April, and more than one-third of manufacturers will add jobs, according to the Society for Human Resource Management’s (SHRM) April 2013 Leading Indicators of National Employment (LINE) survey.

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

Employment Expectations

Manufacturing

Service

In April 2013 the hiring rate will drop slightly in manufacturing and increase sharply in services compared with April 2012.

-5.5

 

  

+21.7

Recruiting Difficulty

 

 

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

-8.8

 

+4.7

New-Hire Compensation

 

 

In March 2013 the rate of increase for new-hire compensation was down in both sectors compared with March 2012.

-3.8

 

 

-4.9

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

Employment Expectations

A net of 41.8 percent of service-sector companies will add jobs in April 2013. This is the ninth consecutive month the hiring rate will rise in services and the highest level for April in the past four years. The service hiring index will rise by 21.7 points compared with April 2012.

A net of 37.8 percent of manufacturers will add jobs in April (50.3 percent will hire; 12.5 percent will cut jobs). The sector’s hiring index will fall in April on a year-over-year basis by 5.5 points.

LINE data compare favorably with reports from the U.S. Bureau of Labor Statistics (BLS). For example, several service industries have posted sizable job gains as of late, according to the BLS.

Exempt, Nonexempt Job Vacancies

Vacancies increased in both sectors in March 2013, with salaried and nonsalaried job openings rising in services and manufacturing compared with March 2012.

In the service sector a net total of 15 percent of respondents reported increases in exempt vacancies in March (26 percent reported increases; 11 percent reported decreases). That is a 2.6-point increase from March 2012. For nonexempt service positions, a net total of 22.4 percent of respondents reported more vacancies in March (33.5 percent increased, 11.1 percent decreased). This is a jump of 3.5 points from March 2012.

In the manufacturing sector a net total of 26.5 percent of respondents reported a rise in exempt vacancies in March (31.1 percent reported increases; 4.6 percent reported decreases). This represents a 15.7-point increase from March 2012. A net total of 39.7 percent of manufacturing respondents reported that nonexempt vacancies rose in March (45.4 percent increased, 5.7 percent decreased). This represents a 26.4-point increase from March 2012.

It is not entirely clear what might be causing high numbers of job vacancies, said Jennifer Schramm, GPHR, SHRM’s manager of workplace trends and forecasting.  “It might be that increased hiring expectations are leading to more vacancies in both exempt and nonexempt jobs. But there also could be a trend of keeping jobs open for longer as hiring managers look for candidates with a more narrow and hard-to-find range of skills and experience.”

Recruiting Difficulty

LINE’s recruiting difficulty index measures how challenging it is for firms to recruit candidates for the positions of greatest strategic importance to them. Difficulty in recruiting candidates for key jobs increased in services and decreased in manufacturing compared with March 2012.

A net of 10.2 percent of service-sector HR professionals had a tougher time recruiting in March, an increase of 4.7 points from a year ago and the highest net level of recruiting difficulty in four years for the month of March.

“Given the hiring momentum in the service sector, it is not surprising that recruiting difficulty is also up in services compared with this time last year, though it is down slightly in manufacturing,” said Schramm.

A net of 8.4 percent of manufacturing respondents had more difficulty with recruiting in March, which represents a decline of 8.8 points from March 2012.

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

New-Hire Compensation

The rate of increase for new-hire compensation dropped in both sectors in March, however.

In the service sector a net total of 5.1 percent of companies increased new-hire compensation in March (6.0 percent increased; 0.9 percent decreased), representing a 4.9-point drop from March 2012. In the manufacturing sector a net total of 5.2 percent of respondents reported increasing new-hire compensation in March (5.8 percent increased; 0.6 percent decreased)—down 3.8 points from March 2012.

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 0.1 percent in February 2013 from February 2012. Several other surveys also have projected minimal increases to salary budgets in 2013, most commonly around 2.5 percent to 3 percent.

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. However, if hiring rates improve significantly, new-hire compensation can be expected to increase, said Schramm.

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

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