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posted on 09 February 2015

January 2015 Conference Board Employment Index Again Improves

Written by Steven Hansen

The Conference Board's Employment Trends Index - which forecasts employment for the next 6 months - again strengthened. The index has been improving for 12 months.

The Conference Board believes future good employment growth will likely continue in the coming months - and Econintersect concurs that relatively good employment growth will continue.

From the Conference Board:

The Conference Board Employment Trends Index (ETI) increased in January. The index now stands at 127.86, up from 127.17 (a downward revision) in December. This represents a 7.6 percent gain in the ETI compared to a year ago.

"The Employment Trends Index suggests that strong job growth is likely to continue through the first half of the year," said Gad Levanon, Managing Director of Macroeconomic and Labor Market Research at The Conference Board. "As a result, wage growth will accelerate, thereby increasing pressure on profitability which is already suffering from low productivity growth and the strong dollar."

January's increase in the ETI was driven by positive contributions from six of the eight components. In order from the largest positive contributor to the smallest, these were: Percentage of Respondents Who Say They Find "Jobs Hard to Get," Real Manufacturing and Trade Sales, Industrial Production, Percentage of Firms With Positions Not Able to Fill Right Now, Job Openings, and Ratio of Involuntarily Part-time to All Part-time Workers.

To add context to this index, the following graph compares BLS non-farm payrolls, the Econintersect Employment Index, and The Conference Board ETI. Econintersect uses non-labor and mostly non-monetary economic pulse points in constructing its index, while The Conference Board uses mostly elements of employment data.

Comparing BLS Non-Farm .mployment YoY Improvement (blue line, left axis) with Econintersect Employment Index YoY Improvement (red line, left axis) and The Conference Board ETI YoY Improvement (yellow line, right axis)


The graph above offsets the Conference Board ETI by 5 months. Note that both the Conference Board and the Econintersect indices are showing an improving long term trend.

Caveats on the Employment Trends Index

According to the Conference Board:

The Employment Trends Index aggregates eight labor-market indicators, each of which has proven accurate in its own area. Aggregating individual indicators into a composite index filters out "noise" to show underlying trends more clearly.

The eight labor-market indicators aggregated into the Employment Trends Index include:

  • Percentage of Respondents Who Say They Find "Jobs Hard to Get" (The Conference Board Consumer Confidence Survey
  • Initial Claims for Unemployment Insurance (U.S. Department of Labor)
  • Percentage of Firms With Positions Not Able to Fill Right Now ( National Federation of Independent Business Research Foundation)
  • Number of Employees Hired by the Temporary-Help Industry (U.S. Bureau of Labor Statistics)
  • Part-Time Workers for Economic Reasons (BLS)
  • Job Openings (BLS)
  • Industrial Production (Federal Reserve Board)
  • Real Manufacturing and Trade Sales (U.S. Bureau of Economic Analysis)

Unfortunately many of these indices are not accurate in real time being subject to at times significant backward revision.

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