The modest employment growth of December 2005 will be seen again in December 2006, with employers showing no evidence of increasing wage inflation, according to the December Leading Indicator of National Employment (LINE) report from the Society for Human Resource Management (SHRM) and the Rutgers University School of Management and Labor Relations.
Both the manufacturing and service sectors report that it has become increasingly difficult to hire highly qualified workers to fill key positions, due to a drop in the large pool of qualified job seekers available.
The recruiting difficulty indexes for the manufacturing and service sectors are now at about the same level (20.9 percent and 22.8 percent). The LINE "net increasing index" is calculated by taking the percentage increasing minus the percentage decreasing.
For the manufacturing industry, employment expectations decreased over the last month, with 40.7 percent of employers planning to hire in the next five weeks compared to 55.9 percent in November, the LINE report noted, although this decrease could be due to seasonal conditions. Still, the December 2006 index (31.5 percent) remains substantially above the level of December 2005 (26.4 percent).
Fewer manufacturers reported cutting their workforces in December 2006 than in December 2005 (9.2 percent versus 16.7 percent). The new-hire compensation index in November 2006 (11.9 percent) fell back to almost the same level of November 2005 (11.2 percent).
The index for exempt vacancies in manufacturing is also at almost the same level in November 2006 (8.6 percent) as it was in November 2005 (8.9 percent). The index for nonexempt vacancies declined to 8.8 percent in December 2006; down substantially from its December 2005 level of 13.5 percent. Vacancy growth remains strong within exempt manufacturing positions.
In the service sector, almost 50 percent of service-sector employers have plans to increase hiring in December. December 2006 indexes (41.4 percent) remain at about the same level as in December 2005 (41.7 percent).