Labor market expected to remain soft in July
The SHRM/Rutgers Leading Indicators of National Employment® (LINE®) survey of the manufacturing and private service-providing sectors, which make up more than 90 percent of the U.S. private sector employment, indicates that similar to last month, the labor market in July 2008 will remain soft and much weaker than it was a year ago. Employment expectations for July are down sharply in both the manufacturing and the service sectors.
Within the manufacturing sector, the employment expectations index dropped from 48.8 in July 2007 to 30.9 in July 2008. July 2007 was a month in which manufacturing employment decreased by 6,000 jobs on a seasonally adjusted basis and by 64,000 jobs on a not seasonally adjusted basis.
Within the service sector, the index dropped substantially from July 2007 to July 2008 (52.7 to 38.5). July 2007 was a month in which private service sector employment rose by 114,000 jobs on a seasonally adjusted basis.
The drop in the manufacturing and service sectors is attributed to both the drop in the percentage of organizations with increasing employment expectations and the rise in the percentage of organizations that expect to decrease employment. Within manufacturing, the July 2008 index level is lower than for any other July in the last five years.
Within the manufacturing sector, the new-hire compensation index fell from 8.2 in June 2007 to 7.9 in June 2008. Within the service sector, the new-hire compensation index rose from 8.9 in June 2007 to 10.8 in June 2008. A much larger percentage of companies in both the manufacturing and service sectors see increasing rather than decreasing new-hire compensation.
Within both the manufacturing and service sectors, the recruiting difficulty index is lower than it was this time last year. 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 June 2008 recruiting difficulty for manufacturing dropped substantially compared with June 2007 (1.4 and 23.1 respectively). In the service sector, the recruiting difficulty index also fell significantly during this time period (-4.3 compared with 24.2).