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LINE: Hiring Expectations Still Low but Improving
 

By Theresa Minton-Eversole  9/4/2009

Hiring in September 2009 will reach a level not seen in nearly a year, according to the latest Society for Human Resource Management (SHRM) Leading Indicators of National Employment (LINE) survey, released Sept. 4, 2009. 

Though employers won’t be hiring in September 2009 at the rate they did in September 2008, a combined 68.6 percent of manufacturers and service companies say they will add workers during the month. That is the highest combined level of hiring since October 2008.

“HR professionals are reporting hiring expectations for September that, though lagging compared to a year ago, are much more positive than the first half of 2009,” says Jennifer Schramm, manager of workplace trends and forecasting for SHRM.

The LINE report tracks four employment indices: employers’ hiring expectations, job vacancies, recruiting difficulty 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 sectors employ more than 90 percent of the nation’s private-sector workers. 

Employment Expectations

Month/Year

Percentage Increasing

Percentage Decreasing

Net  Increasing

 

 

 

 

 

Manufacturing

Sept. 2006

58.0

11.1

46.9

 

Sept. 2007

49.4

18.0

31.4

 

Sept. 2008

39.4

15.3

24.1

 

Sept. 2009

33.0

19.2

13.8

 

Annual change

-6.4

3.9

-10.3

Service Sector

Sept. 2006

53.2

11.8

41.4

 

Sept. 2007

50.5

6.3

44.2

 

Sept. 2008

44.2

12.9

31.3

 

Sept. 2009

35.6

12.8

22.8

 

Annual change

-8.6

-0.1

-8.5

Employment Expectations

September marks the highest level of hiring in manufacturing since October 2008. The last time the year-over-year change in LINE’s employment expectations index, which has tracked consistently with national economic patterns since the recession began in December 2007, was positive was November 2007.

Year-over-year change will still be negative in September 2009, but more HR professionals in the manufacturing and service sectors report that their organizations will add jobs than those that plan to conduct layoffs for the third month in a row.

A net total of 13.8 percent of manufacturing sector respondents will add jobs in September 2009. In addition, a net total of 22.8 percent of responding service-sector companies will add jobs in September 2009, surpassing the rate of layoffs for the fifth straight month.

Exempt, Nonexempt Job Vacancy Rates

Vacancies for salaried jobs rose in both the manufacturing and service sectors in August 2009, according to SHRM’s LINE. Defined as open positions that employers are trying to fill, changes in the number of job vacancies can be one of the earliest indicators of a shift in the balance between labor supply and demand.

In the manufacturing sector, a net total of 13.5 percent of respondents reported increases in exempt vacancies in August 2009 (22.2 percent reported increases, 8.7 percent reported decreases). This is an increase of 8.9 percent from August 2008, and the first year-over-year increase for exempt vacancies in manufacturing since February 2008—another sign that companies are beginning slowly to add to their payrolls.

In addition, a net total of 14.0 percent of manufacturing respondents reported that nonexempt vacancies increased in August 2009 (23.3 percent increased, 9.3 percent decreased). This is the first year-over-year increase in nonexempt vacancies for manufacturing since May 2008, and perhaps an indicator that demand has surged for hourly production jobs.

In the service sector, a net total of 1.1 percent of respondents reported increases in exempt vacancies in August 2009 (15.6 percent reported increases, 14.5 percent reported decreases). Although it represents a small jump in job openings, it is the first year-over-year increase for exempt vacancies in services since June 2008. 

----------------------------------------------------
The high number of job seekers in the labor market
 is making it easier for organizations to fill jobs quickly
 and at lower starting compensation rates.
-- Jennifer Schramm, manager, workplace trends
and forecasting, SHRM
---------------------------------------------------

For nonexempt service positions, a net total of 0.4 percent reported decreased vacancies in August 2009 (14.8 percent increased, 15.2 percent decreased). This marked a slight change from August 2008, when a net total of 4.4 percent of service companies reported increased nonexempt vacancies.

Another indicator that hiring might be on the upswing is the increase in online job advertising. Online advertised vacancies rose by 169,000 to 3,464,800 in August 2009, according to The Conference Board’s latest Help-Wanted Online Data Series, released Aug. 31, 2009. Since April 2009, online job demand is up by 300,000, with many of the largest states now showing stable trends following about two years of losses that began in May 2007.

With the August 2009 data, there are now three states (New York, Maryland and Virginia) where the job demand trends have turned positive. The August 2009 increase included strong gains in several of the largest states, including California, Texas, Florida and New York.

“The August [2009] increase is good news, showing what we hope will be a continued improvement in job demand this fall,” said Gad Levanon, senior economist at The Conference Board, in a press statement about the data.

August 2009 job demand data are in line with The Conference Board’s recently released Consumer Confidence Index, which also rose in August, largely reflecting consumers' feelings that jobs were becoming easier to find. But, Levanon said, “While all of this is good news, the gap between the number of unemployed and the number of advertised vacancies still remains at about 11 million, with over four unemployed for every online advertised job vacancy.”

Recruiting Difficulty

Jobs might be getting easier to find, but qualified candidates are even easier to find, according to LINE survey respondents. 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.

For the sixth consecutive month in 2009, LINE recorded single-digit response levels for those reporting increased difficulty with recruiting in August 2009.

In the manufacturing sector, a net 10.7 percent of companies reported less difficulty with recruiting (3.1 percent had more difficulty, 13.8 percent had less) in August 2009. This is the second August that more manufacturers reported an easier time recruiting as opposed to those who had more difficulty.

In the service sector, a net of 9.1 percent of companies had less difficulty recruiting in August 2009 (3.7 percent had more difficulty, 12.8 percent had less).

“Despite more companies beginning to step up their employment expectations, recruiting difficulty and new-hire compensation growth continue their decline,” said Schramm. “The high number of job seekers in the labor market is making it easier for organizations to fill jobs quickly and at lower starting compensation rates.”

New-Hire Compensation

Speaking of new-hire compensation, for the 11th straight month increases in wages and benefits packages are expected to fall behind totals from 2008, according to LINE, which provides the only published index of new-hire compensation.

In the manufacturing sector, a net total of 0.2 percent of respondents said they would decrease new-hire compensation in August 2009 (2.7 percent increased, 2.9 percent decreased). That is the lowest August response total in five years for manufacturers reporting increases to new-hire compensation.

The trend of reducing new-hire salaries and benefits was slightly more pronounced in August 2009 for the service sector. A net total of 1.5 percent of companies reduced wages and benefits packages for new hires (3.3 percent increased, 4.8 percent decreased). That marked a major reversal from August 2008, when a net total of 14.2 percent of service companies increased compensation for new hires.

“We have seen new-hire compensation growth falling for almost a year,” said Schramm, “and this could be one of the last indicators to pick up in any recovery.”

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

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