Indicators show labor market will remain soft in June

The latest SHRM/Rutgers Leading Indicators of National Employment® (LINE®) survey show that similar to last month, the labor market in June 2008 will remain soft and will be much weaker than it was a year ago. Employment expectations for June 2008 are down sharply in both the manufacturing and service sectors.

Compared with June 2007, the employment expectations index dropped 11.1 points for manufacturing and 28.2 points for the service sector in June 2008, indicating that far fewer new hires will be made next month.

Regarding the new-hire compensation growth index, the rate of compensation growth increased modestly within the manufacturing sector, rising from 9.8 in May 2007 to 11.4, but within the much larger service sector, it fell significantly from the May 2007 pace (5.9 in May 2008 compared with 17.7 in May 2007).

The recruiting difficulty index for both manufacturing and the service sector dropped from the May 2007 levels. While the percentage of manufacturing firms that believe recruiting is getting more difficult remains larger than the percentage of firms that think it is getting easier, the May 2008 recruiting difficulty index for manufacturing dropped substantially compared with May 2007 (4.2 and 20.8, respectively). In the service sector, the recruiting difficulty index also fell during this time period (7.5 compared with 19.0).