Manufacturers expand payrolls, may continue to add workers as sector rebounds

April 6, 2012

The manufacturing sector has posted gains for another month, as companies within the industry are expanding their payrolls in an effort to keep up with increased demand. The latest Institute for Supply Management (ISM) report showed continued expansion and this may lead to an adjustment of business strategy.

The 32nd consecutive month of expansion in the industry was driven by the overall upward movement of the U.S. economy, as new orders and backlog grew due to the rise in demand from an increase in consumer spending, according to Manufacturing Business Technology.

Employment also grew, and this combination of good news could signal continued expansion in the sector, Bradley J. Holcomb, chair of the ISM, told the news source.

"Production kind of comes along with new orders and backlog (both of which grew as well)," said Holcomb. "Employment, this is a good leading indicator of what we’ll see in the Bureau of Labor Statistics figures that come out shortly. I’d expect some more good news in terms of the size of employment. This is anticipating a continuation of new orders and production."

The ISM survey highlighted how hiring picked up in March, and this increase is something that is projected to occur again for April. The continuation of progress in the sector was detailed in estimations put forth in the report from the Society for Human Resource Management.

The Phoenix Business Journal reported that a majority of manufacturers in the U.S. are planning in April, regardless of whether or not they will be able to find qualified workers.

The hiring could occur despite the challenges faced in recruiting, as a number of manufacturers are struggling to find workers to fill the open positions that have been created at their companies. 

According to the report, a total of 50.3 percent of U.S. manufacturers are planning to add staff in April, down from the 57.6 percent in March but still a positive number. Finding qualified workers remains difficult, as 18.3 percent of companies in the sector have struggled to locate candidates.

The pay for new hires is also set to increase for April, as March saw rises in payroll expenditures for manufacturers in terms of workers who are just starting.

"In the manufacturing sector, a net total of 9.0 percent of respondents reported increasing new-hire compensation in March (9.8 percent increased, 0.8 percent decreased). That is a 2.6-point increase from March 2011," the authors noted.