There will be more job growth in January 2007 than in January 2006, according to the January Leading Indicator of National Employment (LINE) report released Thursday from the Society for Human Resource Management (SHRM) and the Rutgers University School of Management and Labor Relations.
Both the manufacturing and the service sectors are indicating no evidence of increasing wage inflation.
Although overall job vacancies have declined significantly, companies in the manufacturing and service sectors are still having problems hiring highly qualified applicants to fill key positions.
The recruiting difficulty indexes for these segments are at almost the same level (19.5 percent for manufacturing and 22.3 percent for the service sector).
Among manufacturing companies, employment expectations fell between December 2006 and January 2007. Although the decline can be attributed to seasonality, the January 2007 index (28.2 percent) remains substantially above the level of January 2006 (21.3 percent).
Fewer manufacturers are planning to cut their workforces in January 2007 than in January 2006 (11.6 percent vs. 16.9 percent).
The new-hire compensation index for December 2006 (9.8 percent) is below the level of December 2005 (11.3 percent). The percentage of manufacturers with exempt vacancy reductions rose from 12.0 percent to 22.0 percent.
As a result of more firms with vacancy declines, the manufacturing sector nonexempt vacancy index dropped to 0.0 percent. However, the December 2006 recruiting difficulty index (19.5 percent) in manufacturing remains at about the same level as in December 2005 (18.7 percent).
For the service sector, the January 2007 index is mostly unchanged from December 2006 but well above the level of January 2006. Service-sector employment is expected to increase in January 2007.
As in the manufacturing sector, the new-hire compensation index for December 2006 is also below the level of December 2005 (10.7 compared with 12.3 percent).
The percentage of service-sector firms reporting exempt vacancy reductions rose from 9.8 percent in December 2005 to almost 17 percent in December 2006. The decline in the nonexempt vacancy index was the result of fewer firms reporting employment vacancy growth compared to a year ago. This indicates that vacancy growth has slowed and fewer firms are increasing the wage and benefit packages offered to new hires.
A boost in new-hire compensation is not necessary in order to attract more applicants. The overall number of job vacancies is declining. The recruiting difficulty index has climbed from 16.9 in December 2005 to 22.3 in December 2006.