Source: SHRM LINE Report
By Theresa Minton-Eversole 
January 8, 2010

Hiring will increase in January 2010 compared with the same period in 2009, but layoffs persist in the manufacturing and service sectors as the job market continues its painfully slow recovery, according to the latest results of the Society for Human Resource Management’s (SHRM) Leading Indicators of National Employment (LINE) Report. 

For the second consecutive month, fewer than 3 percent of employers in each sector increased wages and benefits packages for new hires in December.

The LINE Report examines four key areas: 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 two sectors employ more than 90 percent of the nation’s private-sector workers.

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

Employment Expectations

While many economists expect high levels of unemployment to remain in the coming months, job seekers should have better prospects in January 2010 compared to January 2009 with the LINE hiring index positive in both sectors. January 2010 marks the seventh straight month that more companies will add jobs than cut jobs in manufacturing, while it is the ninth straight month this has occurred in the service sector.

Manufacturing improved by a net of 37.8 points; that is, a net of 17.6 percent of companies reported they will hire in January 2010, compared with the net 20.2 percent that conducted layoffs a year ago. The service index rose by a net of 21.1 points (a net of 11.3 percent will conduct hiring in January 2010, compared with a net of 9.8 percent that cut jobs a year ago).

“Though hiring continues to improve compared with the same time a year ago, both the manufacturing and service sectors continue to experience layoffs,” said Jennifer Schramm, SHRM’s manager of workplace trends and forecasting. “However, January marks the third straight month that hiring will exceed layoffs in manufacturing and services compared with the previous year. This is also the third consecutive month in which vacancies rose in both sectors compared to this time last year in all four job categories.”

Recruiting Difficulty, Vacancies

For the tenth consecutive month, LINE has recorded single-digit response levels for those reporting increased difficulty with recruiting. In the manufacturing sector, a net of 4.6 percent of companies reported less difficulty with recruiting (i.e., 5.6 percent had increased difficulty and 10.2 percent had less difficulty). This still represents a net increase from December 2008, when a net of 16.3 percent reported less difficulty with recruiting.

In the manufacturing sector, a net total of 12.2 percent of respondents reported increases in exempt vacancies in December 2009 (21.8 percent reported increases, 9.6 percent reported decreases). This represents a 25-point increase from December 2008 and the fifth consecutive month that exempt vacancies are higher than those of the same month the previous year.

Likewise, a net total of 7.7 percent of manufacturing respondents reported that nonexempt vacancies increased in December 2009 (17.6 percent increased, 9.9 percent decreased). This represents a 27.1-point increase from December 2008 and could suggest that work at some companies is being ramped up again slowly.

Although the gains were small, the Federal Reserve reported that industrial production rose 0.8 percent in November.

In the LINE Report’s latest analysis of the service sector, a net of 3.5 percent of companies reported having less difficulty recruiting (6.3 percent had increased difficulty compared to 9.8 percent that had less difficulty). This was a significant turnaround from December 2008, when a net total of 28.5 percent of companies had less difficulty with finding top talent. The results might indicate that some categories of job seekers are finding work more quickly now than they were in 2009.

In the service sector, a net total of 5.0 percent of respondents reported increases in exempt vacancies in December 2009 (13.5 percent reported increases, 8.5 percent reported decreases). This is the fifth consecutive month that exempt vacancies are higher in the service sector than the previous year.

For nonexempt service positions, a net total of 4.4 percent of companies reported increased vacancies in December 2009 (14.9 percent increased, 10.5 percent decreased). This marked a 27.9 point increase from December 2008, when a net total of 23.5 percent of service companies reported decreases in nonexempt vacancies.

New-Hire Compensation

The continuing high rate of unemployment and large pool of job seekers in the market, however, has given many companies the option of reducing the wages and benefits they are offering new hires in the effort to control costs.

In the manufacturing sector, a net total of 0.1 percent of respondents said they would reduce new-hire compensation in December 2009 (2.7 percent increased, 2.8 percent decreased). That is unchanged from December 2008.

In the service sector, a net total of 0.7 percent of surveyed companies reported that they raised new-hire compensation in December 2009 (2.5 percent increased, 1.8 percent decreased). That is a decline from December 2008, when a net of 4.0 percent of service companies increased new-hire compensation.

“Organizations continue to keep new-hire compensation flat,” said Schramm. “Many of the organizations that are hiring are only adding temporary staff.  The new-hire compensation index is likely to remain flat as long as the number of job seekers remains high and competition for jobs [stays] fierce,” said Schramm.