March 25, 2008
The latest SHRM/Rutgers Leading Indicators of National Employment® (LINE®) survey indicates that similar to last month, the labor market in April 2008 will remain soft and will be much weaker than a year ago. Employment expectations are down sharply in both the manufacturing and service sectors.
Within the manufacturing sector, the employment expectations index dropped sharply from 49.7 in April 2007 to 39.0 in April 2008. April 2007 was a month in which manufacturing employment decreased by 31,000 jobs on a seasonally adjusted basis. On a not seasonally adjusted basis, manufacturing employment decreased by 11,000 jobs in April of 2007.
Within the service sector, the index dropped sharply from April 2007 to April 2008 (47.8 to 35.2). April 2007 was a month in which private service sector employment rose by 90,000 jobs on a seasonally adjusted basis and by 636,000 jobs on a not seasonally adjusted basis.
The primary source of the drop is the drop in the percentage of organizations with increasing employment expectations; a much smaller rise was observed in the percentage of organizations with decreasing employment expectations.
Within the manufacturing sector, the new-hire compensation index rose from 5.5 in March 2007 to 8.7 in March 2008. This index is thought to provide an early indication of changing economic conditions.
Within the service sector, the new-hire compensation index is lower than it was a year ago (4.8 in March 2008 compared with 7.4 in March 2007) and at the lowest level since that series was initiated in May 2005.
The percentage of firms in both the manufacturing and service sectors that believe recruiting is getting more difficult remains substantially larger than the percentage of firms that think it is getting easier, the March 2008 recruiting difficulty index for manufacturing dropped substantially from March 2007 (3.4 compared with 24.2). In the service sector, the recruiting difficulty index fell, but less dramatically, over the same time period (8.6 compared with 14.4).
Within both the manufacturing and service sectors, the recruiting difficulty index is at its lowest level in years. Nevertheless, many firms continue to report difficulty in recruiting candidates for a number of key positions within their organizations.