New Report Finds Weak Employment Growth for Manufacturing

Employment grew at a weaker pace in December for both the manufacturing and service sectors, and fewer employers reported recruiting for vacant positions, according to findings reported today in the December 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. In addition, the reports states that fewer employers from both sectors expected to hire new employees in the next 30 days.

LINE is an economic indicator that identifies early economic trends and changes in the national job market by surveying human resource professionals at manufacturing and service sector firms. It reports on five employment measures.

According to the report, the overall employment numbers in December were the lowest seen in 2005. While December is typically a weak month for manufacturing employment, the December 2005 index is below the December 2004 index level, suggesting that this drop reflects more than the usual seasonal fluctuations. According the LINE report, the decline in employment numbers was largely due to manufacturers cutting non-exempt jobs and fewer manufacturers actively recruiting for vacant positions. There was also a decline in the percentage of employers who expected to increase headcount in the next 30 days.

Human resource professionals also reported recruiting difficulty, and new hire compensation remained relatively unchanged from November to December.

This is the first month LINE begins reporting employment numbers from the U.S. service sector. While the manufacturing sector provides early indications of the economy's direction, the service sector makes up a substantial portion of the U.S. economy and provides a broader understanding of the job market.

Data for the report was collected through a survey of human resource executives at more than 500 manufacturing and 500 service sector firms. The SHRM/Rutgers LINE is a weighted average of five component indexes-employment, vacancies, recruiting difficulty, new hire compensation and employment expectations. All data are reported using diffusion indexes.