Manufacturing employment, compensation, recruiting difficulty down

The current SHRM/Rutgers LINE® survey indicates that employment expectations for December 2007 have dropped in the manufacturing sector. New-hire compensation is lower than it was a year ago. The exempt vacancy index is higher than it was in November 2006, while the nonexempt vacancy index is lower. The recruiting difficulty index dropped to about half of its November 2006 level.

The LINE employment expectations index provides an early indication of the U.S. Bureau of Labor Statistics (BLS) numbers that are released approximately five weeks later. Within the manufacturing sector, this index dropped from 31.5 in December 2006 to 27.6 in December 2007. December 2006 was a month in which manufacturing employment decreased, shrinking by 12,000 jobs on a seasonally adjusted basis and by 16,000 jobs on a not seasonally adjusted basis.

Compensation (wages plus benefits) tends to rise during periods of economic expansion. These cyclical increases often appear first in the compensation offered to new hires. The hiring process forces firms to more rapidly adjust these compensation levels to the current labor market conditions. Compared with measures of the compensation level for all workers, an index of new-hire compensation should provide an earlier indication of changing economic conditions. Within the manufacturing sector, the new-hire compensation index for November 2007 is below the level of a year ago (7.6 compared with 11.9).

Within the manufacturing sector, the November 2007 exempt vacancy index is higher than the November 2006 rate (11.2 compared to 8.6), while the November 2007 nonexempt vacancy index is lower than the level of November 2006 (5.4 compared to 8.8). These numbers suggest that the sluggishness in manufacturing employment primarily is affecting exempt workers.

The percentage of firms that believe recruiting is getting more difficult remains substantially larger than the percentage of firms that think it is getting easier. The November 2007 recruiting difficulty index for both the manufacturing sector is far below the levels of November 2006 (10.4 compared to 20.9).

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