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posted on 09 November 2015

October 2015 Conference Board Employment Index Suggests No Significant Slowdown in Job Growth Expected through 1Q2016

Written by Steven Hansen

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

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

From the Conference Board:

The Conference Board Employment Trends Index™ (ETI) increased in October. The index now stands at 129.48, up from 128.65 in September (after a downward revision). The change represents a 4.1 percent gain in the ETI compared to a year ago.

"The Employment Trends Index continues to show solid and broad-based gains, with no significant slowdown in job growth expected through the first quarter of 2016," said Gad Levanon, Managing Director of Macroeconomic and Labor Market Research at The Conference Board. "Solid job growth and the lack of recovery in labor-force participation suggest that the unemployment rate may dip below 4.5 percent by this time next year."

October'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: Ratio of Involuntarily Part-time to All Part-time Workers, Number of Temporary Employees, Real Manufacturing and Trade Sales, Industrial Production, Initial Claims for Unemployment Insurance, and Job Openings.

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)

employment_indices.png

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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