Manufacturing employers optimistic on hiring plans

April hiring projections within the manufacturing sector will match the substantial growth seen in April 2006, but service-sector growth will be slower than last year. The findings, released March 27, are reported in the April 2007 Employment Expectations report of the Leading Indicator of National Employment (LINE), a collaborative effort between the Society for Human Resource Management (SHRM) and the Rutgers University School of Management and Labor Relations.

This LINE employment expectations report references the same April period as the report the Bureau of Labor Statistics (BLS) will release on May 4. The responses in the LINE survey are weighted using the proportion of total employment represented by the respondent's industry. Beginning this month, these weights have been recalculated to incorporate the annual benchmark revisions that the BLS released on February 2.

The responses to the March 2007 SHRM/Rutgers LINE survey provide no evidence of widespread wage inflation, and reveal that new-hire compensation is rising much more slowly than it was a year ago. In both sectors, recruiting difficulty remains a major concern. The percentage of firms that believe recruiting is getting harder is substantially larger than the percentage of firms that think it is getting easier. Recruiting difficulty is down in manufacturing, but up in the service-sector.

The indicator reports on four employment measures: job expectations, job vacancies, new-hire compensation and recruitment difficulty. The LINE employment expectations index has consistently provided an early indication of the upcoming BLS numbers. The LINE "net increasing index" is calculated by taking the percentage increasing minus the percentage decreasing. The figure below shows how the LINE employment expectations index, in red, has correlated with the BLS numbers, which come out five weeks later. To view the full report, visit www.shrm.org/LINE.

Manufacturing
Within the manufacturing-sector, the employment expectations index for April 2007 was nearly flat, dropping from 50.1 for March 2007 to 49.7 for April 2007. Slightly more manufactures expect to expand their workforce in April 2007 than in April 2006 (60.7 percent vs. 57.6 percent). The new-hire compensation index for March 2007 (5.5) is well below the levels of a year ago (11.0). For the manufacturing-sector, the March 2007 exempt vacancy index (16.3) is below the March 2006 level (24.0). The largest difference between 2007 and 2006 is the percentage of manufacturing-sector firms reporting increases in exempt vacancies. That percentage fell from 33.8 percent in March 2006 to 25.8 percent in March 2007. Manufacturing-sector firms appear to be having more success in reducing the number of unfilled exempt positions. The non-exempt vacancy index dipped slightly from 17.4 in February 2007 to 16.2 in March 2007. The March 2007 non-exempt vacancy index (16.2) is well below the March 2006 index (23.8). The recruiting difficulty index for March 2007 (24.2) is considerably below the level of March 2006 (29.4).

Service
Fewer service-sector employers plan to increase hiring in April 2007 than in April 2006 (55.7 percent vs. 58.2 percent). The new-hire compensation index (7.4) is only slightly below the levels of a year ago (7.8). The March 2007 exempt vacancy index is above the March 2006 level (22.4 vs. 19.4). The non-exempt vacancy index dropped from 21.0 in February 2007 to 13.6 in March 2007. Much of that decline is likely the result of seasonality. The March 2007 index is slightly below the March 2006 level (13.6 vs. 14.5). Within the service-sector, the March 2007 recruiting difficulty index (14.4) is considerably above the level of March 2006 (10.0).

The LINE index is an economic indicator that identifies early economic trends and changes in the national job market by surveying human resource (HR) executives at manufacturing and service-sector firms. The responses in the LINE survey are weighted using the proportion of total employment represented by the respondent's industry. The indicator is released at 8:30 a.m. on the fourth Tuesday of each month.

The Society for Human Resource Management (SHRM) is the world's largest association devoted to human resource management. Representing more than 210,000 individual members, the Society's mission is both to serve human resource management professionals and to advance the profession. Founded in 1948, SHRM currently has more than 550 affiliated chapters within the United States and members in more than 100 countries. Visit SHRM online at www.shrm.org.

The School of Management and Labor Relations at Rutgers, the State University of New Jersey, is a leading center of scholarly and applied research on human resource management issues. The school creates and disseminates knowledge that fosters a better understanding of the nature of employment and work in modern society. The Rutgers Master of Human Resource Management degree is one of the top human resource management programs in the nation.