Service-Sector Growth Slightly Stronger than in July 2006
This LINE(R) employment expectations report references the same July period as the report the Bureau of Labor Statistics (BLS) will release on August 3, 2007. The responses in the LINE(R) survey are weighted using the proportion of total employment represented by the respondent's industry.
Compared with a year ago, new-hire compensation is rising more slowly both within manufacturing and within the service sector. The number of vacant positions that employers are actively trying to fill is rising rapidly within the exempt and nonexempt manufacturing sector. However, it has remained flat in the exempt service sector and has dropped substantially in the nonexempt service sector. Recruiting difficulty increased in the service sector, but is relatively flat in the manufacturing sector compared with a year ago. In both sectors, recruiting difficulty remains a major concern.
The indicator reports on four employment measures: job expectations, job vacancies, new-hire compensation and recruitment difficulty. The LINE(R) employment expectations index has consistently provided an early indication of the upcoming BLS numbers. The LINE(R) "net increasing index" is calculated by taking the percentage increasing minus the percentage decreasing. The figure below shows how the LINE(R) 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.
The employment expectations index dropped from 52.7 in July 2006 to 48.8 in July 2007. Within manufacturing, the new-hire compensation index for June 2007 is below the level of a year ago (8.2 versus 11.6). This is consistent with the slower manufacturing employment growth. The June 2007 exempt vacancy index (14.0) and the nonexempt vacancy index (17.4) are both well below the levels of June 2006. These numbers suggest that the slow growth in manufacturing employment has expanded to include both exempt and nonexempt workers. With exempt and nonexempt vacancies rising less rapidly compared with a year ago, the June 2007 recruiting difficulty index (23.1) is just below the level of June 2006 (27.8).
Slightly fewer service-sector firms expect to expand their workforce in July 2007 than in July 2006 (56.4 percent versus 58.5 percent). The new-hire compensation index (8.9) is below the level of a year ago (10.2). Within the service sector, both the exempt and nonexempt vacancy indices fell substantially from 14.9 in June 2006 to 3.2 in June 2007 for exempt service- sector workers and from 25.1 in June 2006 to -11.9 in June 2007 for nonexempt workers. This is the first time recently that a higher percentage of service- sector employers are reporting a decrease in nonexempt vacancies than are reporting an increase in nonexempt vacancies. These data suggest that the slow growth in manufacturing employment is being mirrored in the service sector. The June 2007 recruiting difficulty index (24.2) is well above the level of June 2006 (11.8).
The LINE(R) 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 indicator is released at 8:30 am ET 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.