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Is the Job Market Really Recovering? It’s Complicated

Tim Sprinkle
The Exchange

The good news for U.S. job seekers is that firms across the board are hiring again. The bad news is that the rate of job growth has slowed, in some case dramatically, in the last year.

That's according to the latest Leading Indicators of National Employment (LINE) survey from the Society for Human Resource Management (SHRM), which on Thursday reported that a net of 43.8 percent of manufacturers and 22.4 percent of service businesses will add jobs in June, both of which are down from this time last year. Based on the survey findings, manufacturing hiring is down 3.2 percent since June 2011, while service sector jobs are down a staggering 14 percent in that time (after falling 14.4 percent between the summers of 2010 and 2011).

Need more bad news? How about the fact that weekly applications for unemployment benefits today jumped to a five-week high of 383,000?

"Though the monthly LINE findings continue to show positive net employment expectations, year-over-year comparisons paint a somewhat less rosy picture," said Jennifer Schramm, SHRM's manager of workplace trends and forecasting. "The percentage of manufacturers who say they are hiring has fallen below that of the same month in the previous year in 10 of the past 12 months. In the service sector, hiring has fallen below that of the same month in the previous year in all 12 months."

It is a grim headline, and it looks even worse in chart form.

Positive Trend

Still, overall hiring figures are up dramatically since June 2009, when only 24.5 percent of manufacturers told SHRM that they planned to hire in the next month (which was a net 1.4 decrease overall, when the 25.9 percent of firms that planned to cut jobs were taken into account). Back then, net 24.8 percent of service sector companies said they were planning to hire, which was higher than today, but 39.7 percent of those said it was getting easier at the time to find qualified candidates for their job openings (due to the oversaturated hiring pool).

And what a long way we've come. As of now, hiring is getting tougher for employers, with 13.8 percent net of manufacturers and 7.8 percent net of service companies reporting having had recent trouble recruiting candidates, thanks in part to the glut of opportunities out there for job seekers.

A Manufacturing Recovery on the Horizon

There is even more good news coming for the manufacturing sector. According to a recent report from The Hackett Group, the practice of "onshoring" is in full swing and is expected to reach a tipping point in the next two to three years, as more and more U.S.-based companies bring manufacturing jobs back from China and other low-cost countries, thanks to rising Chinese wages and productivity improvements here at home. As it stands, Chinese manufacturing exports to the U.S. support some 20 million jobs in China and 75 percent of U.S. companies say that at least some of their manufacturing capacity is outsourced to that country.

According to The Hackett Group, Caterpillar, Nissan, NCR, Yamaha, Ford and others have recently announced plans to bring portions of their manufacturing operations back home, while both Boeing and GE have said that they are committed to onshoring manufacturing jobs in the near future.

What do you think? Are you optimistic about the future of U.S. manufacturing and service sector jobs?