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Hiring Activity to Accelerate in October, LINE Shows
Recruiting difficulty in manufacturing, service sectors reached four-year highs in September

By Theresa Minton-Eversole  10/3/2013
More businesses in manufacturing and services will be hiring workers this October than did so at the same time last year, according to the Society for Human Resource Management’s (SHRM) Leading Indicators of National Employment (LINE) survey for October 2013. 

Based on a monthly survey of private-sector human resource professionals at more than 500 manufacturing and 500 service-sector companies, SHRM’s employment report examines four key areas: employers’ hiring expectations, difficulty in recruiting top-level talent, job vacancies and new-hire compensation. 

Employment Expectations

Manufacturing

Service

In October 2013 the hiring rate will rise in manufacturing and services, compared with October 2012.

+7.3

 

+3.4

Recruiting Difficulty

 

 

In September recruiting difficulty was nearly unchanged in manufacturing and up in services, compared with a year ago.

+0.8

 

+9.9

New-Hire Compensation

 

 

In September the rate of increase for new-hire compensation dropped in manufacturing and rose in services, compared with a year ago.

-3.7

 

 

+2.6

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

Employment Expectations

“October employment expectations are relatively upbeat, with a year-over-year increase in both sectors,” according to Jennifer Schramm, GPHR, SHRM’s manager of workforce trends and forecasting. A net of 37.3 percent of service-sector companies and a net of 41.9 percent of manufacturers will expand their payrolls during the month.

For the 15th consecutive month, the hiring rate will rise in services. The survey revealed that 43.4 percent of participating service-sector companies will hire, and only 6.1 percent will cut jobs, representing a three-year high for hiring in October; the index will rise by 3.4 points from a year ago.

Hiring will also increase during October in the manufacturing sector, with 51.2 percent of respondents reporting they will add workers; only 9.3 percent will cut jobs. The sector’s hiring index will increase by 7.3 points, compared with a year ago.

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

Recruiting Difficulty

Recruiting was more challenging in September 2013, said Schramm, pointing to more calls in the labor market for workers with in-demand skills. Difficulty in recruiting candidates for key jobs reached four-year highs in both sectors for the month.

A net of 17.7 percent of service-sector HR professionals reported they had a tougher time attracting talent in September—up 9.9 points from September 2012. A net of 16.9 percent of manufacturing respondents had more difficulty with recruiting in September, marking an increase of just 0.8 points from September 2012. Both net totals represent four-year highs for the month of September.

A March 2013 SHRM survey also showed that 66 percent of organizations that were hiring were having a difficult time recruiting—up from 52 percent in 2011. In addition, 98 percent of respondents to a May 2013 SHRM survey said they believe that “a shortage of skilled workers” will have some type of impact on the workforce over the next five years.

Exempt, Nonexempt Vacancies

Another indication that demand may be growing was the noticeable increase in job vacancies in both manufacturing and services last month, said Schramm. For example, openings for salaried positions in both sectors hit four-year highs for the month of September.

In the manufacturing sector a net total of 19.3 percent of respondents reported more exempt vacancies in September (28.2 percent reported increases; 8.9 percent reported decreases). This number represents a 10.2-point increase from September 2012. In the service sector a net total of 21.1 percent of respondents reported September increases in exempt vacancies (25.3 percent reported increases; 4.2 percent reported decreases), representing a rise of 4.4 points from September 2012.

Monthly nonexempt openings have not followed a specific trend lately when compared with the previous year, according to Schramm. But HR professionals in both sectors have generally reported increases in nonexempt job openings for every month since September 2009, or shortly after the end of the Great Recession.

For nonexempt service positions, a net total of 26.9 percent of respondents said their organization had more vacancies in September (34.4 percent reported increases; 7.5 percent decreases). This is a 13.2-point jump from September 2012. A net total of 24 percent of responding manufacturers said nonexempt vacancies in their company rose in September (33.5 percent reported increases; 9.5 percent reported decreases), marking a 1.5-point drop from a year earlier.

New-Hire Compensation

In the service sector, LINE results reveal that a net total of 7.7 percent of companies increased new-hire compensation in September, up 2.6 points from a year ago. In the manufacturing sector a net total of 6.3 percent of respondents reported increasing new-hire compensation in September, down 3.7 points from September 2012.

If hiring rates improve significantly, new-hire compensation can be expected to increase, Schramm said. Currently, however, 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 0.7 percent in August 2013, compared with August 2012.

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

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