Light industrial staffing firms are finding themselves scrambling to assist their clients in the face of surging demand for workers, record levels of orders, and a scarcity of candidates. This article takes note of the current historically high demand for regular and temporary workers, and takes a look at trends in the US manufacturing sector, a key client sector for industrial staffing.
Recruiting difficulty hit an all-time high in June, according to our most recent Pulse Survey of staffing industry conditions, reaching 3.78 on a 5.0 point scale; in contrast, sales difficulty fell to 2.33. Recruiting difficulty throughout much of this year has been attributable to a shortage of willing workers due to such factors as health concerns, lack of childcare and enhanced federal unemployment benefits that expired in early September. As a result of the candidate shortage, SIA lowered its forecast for the US industrial staffing segment to 12% — down from 16% — for a market size estimate of $34.0 billion this year. For comparison, the industrial staffing market was $34.9 billion in 2019, prior to the pandemic.
The US manufacturing sector has 378,000 fewer jobs (-3.0%) than prior to the pandemic (Feb 2020), but has steadily added an average of 39,000 jobs monthly from May to August, according to the US Bureau of Labor Statistics. Among the large durable goods sectors, computer and electronics are up 5,000 jobs (+0.5%) versus the start of the pandemic, faring the best, while jobs remain down moderately in machinery (-3.1%), fabricated metal products (-3.4%), and transportation equipment manufacturing (-6.2%). Nevertheless, transportation equipment makers have added an average of 14,000 jobs per month from May to August. Among the large nondurable goods manufacturing segments, jobs are up 5,000 (+0.6%) in chemical manufacturing and down slightly in food manufacturing (-1.4%). Jobs were down most sharply in petroleum and coal products (-11.7%) and printing (-11.2%).
A consequence of the shortage of candidates, pay rates have been rising and hiring bonuses have become more prevalent. And as the market remains a “candidate market” with employers bidding for scarce talent, staffing firms have found themselves in the role of advisor, recommending pay strategies and urging their clients to move quickly and streamline their hiring actions. One silver lining of this “candidate market” has been expansion in gross margin percentage for many industrial staffing firms. According to our Pulse Survey, a net 41% of industrial staffing firms reported a rising trend in gross margin percentage over the past three months, and a net 47% of firms anticipate further expansion over the next six months.
As we head into the fall season, and with hiring for the holiday seasonal ramp-up already beginning, industrial staffing firms are busy filling record levels of orders, with nationwide job openings measured at an all-time high of 10.9 million in the last reported figure for July. A key question is whether the end of federal unemployment benefits at the start of this month will bring a wave of new candidates into the labor force. Whether it does or not, the current setting offers a tremendous wealth of opportunity for those industrial staffing firms that are able to innovate their processes and deliver candidates to American businesses that find themselves in such great need.
