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August Employment Expectations Take Dramatic Dive

By Kathy Gurchiek  7/22/2008
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A continually soft labor market is expected to be even weaker in August 2008 than a year ago, with hiring expectations, recruiting difficulty and new-hire compensation all down sharply in manufacturing and service sectors, according to the latest Society for Human Resource Management (SHRM)/Rutgers LINE survey report.

The Leading Indicators of National Employment (LINE) Report is released more than a month ahead of the Bureau of Labor Statistics’ (BLS) Employment Situation Report for the same period and identifies early trends and changes in the national job market.

 “These findings are pretty dramatic—some real drops and extended months of comparative lows compared to previous years,” said Jennifer Schramm, SHRM manager of workplace trends and forecasting.

Employment Expectations

The employment indexes for manufacturing and service sectors are at the lowest August levels for four years, the LINE report shows.

In manufacturing, the August 2008 employment expectations net increase index dropped by more than half, from 47.3 in August 2007 to 22.5 in August 2008.

In the service sector, the August 2008 employment expectations net increase index also dropped by more than half compared to August 2007.

The employment expectations index drops for August 2008 in both sectors are attributable to “both the drop in the percentage of organizations with increasing employment expectations and the rise in the percentage of organizations with decreasing employment expectations,” according to the LINE report.

New-Hire Compensation

Compensation for new hires, which includes wages and benefits, might provide an early indication of changing labor market conditions, according to the LINE report. The report provides the only published index of new-hire compensation in the United States.

The new-hire compensation for the service sector fell from 14.1 in July 2007 to 6.6 in July 2008; in manufacturing, it fell from 12.1 in July 2007 to 0.4 in July 2008.

Job Vacancies

In addition, the report looks at the changes in the number of vacancies in exempt and nonexempt employment that employers actively are trying to fill as an early indicator of the supply and demand of labor.

The service sector’s index for exempt positions was down significantly—dropping by more than two-thirds, from 11.1 in July 2007 to 3.1 in July 2008.

For nonexempt positions, the index dropped by nearly half, from 16.7 to 9.7 during the same time period.


The recruiting difficulty index, which measures how difficult it is for employers to recruit “A-level” candidates to fill positions that are of greatest strategic value to the employers, is lower than at this time July 2007 for both sectors.

The service sector index fell sharply, from 15.2 in July 2007 to 9.8 July 2008. In manufacturing, it fell substantially, from 14.7 in July 2007 to -7.6 in July 2008.

The drop for the service sector is attributed to a higher percentage of HR professionals reporting a decrease in the difficulty they experience in recruiting their A-level candidates, according to Schramm.

The drop for the manufacturing sector is attributable to an increase in the number of companies reporting lower levels of recruiting difficulty and a decline in the number of companies reporting increasing difficulty recruiting talent, according to the LINE report.

The LINE report is produced by SHRM and the Rutgers University School of Management and Labor Relations. Data for the report is collected through a monthly survey of HR executives at more than 500 manufacturing and 500 service sector organizations.

Kathy Gurchiek is associate editor for HR News. She can be reached at

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