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posted on 05 October 2015

September 2015 Conference Board Employment Index Suggests Improving Jobs Growth In the Future

Written by Steven Hansen

The Conference Board's Employment Trends Index - which forecasts employment for the next 6 months - improved, and the rate of growth improved relative to last month. Consider that this projected growth is six months from now.

Econintersect also is forecasting marginally improving jobs growth six months from now.

From the Conference Board:

The Conference Board Employment Trends Index™ (ETI) increased slightly in September. The index now stands at 128.76, up from 128.66 in August (a downward revision). The change represents a 4.6 percent gain in the ETI compared to a year ago.

"While Friday's job report was a disappointment, and the trend in job growth is probably slower than in the last couple of years, the Employment Trends Index does not suggest a negative shock will impact the labor market any time soon," said Gad Levanon, Managing Director of Macroeconomic and Labor Market Research at The Conference Board. "Slower job growth is more in line with the mediocre GDP growth of recent years, and also suggests that the very low productivity growth during that time is not sustainable."

September's increase in the ETI was driven by positive contributions from five of the eight components. In order from the largest positive contributor to the smallest, these were: Ratio of Involuntarily Part-time to All Part-time Workers, Job Openings, Initial Claims for Unemployment Insurance, Real Manufacturing and Trade Sales, and Number of Temporary Employees.

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 Employment 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 a marginally improving rate of growth.

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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