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posted on 07 December 2015

November 2015 Conference Board Employment Index Suggests A Slowdown in Job Growth

Written by Steven Hansen

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

Econintersect is forecasting a marginally improving jobs growth six months from now. Note that the Econintersect Employment Index is not based on employment data.

From the Conference Board:

The Conference Board Employment Trends Index™ (ETI) decreased in November. The index now stands at 128.69, down from 129.75 in October (an upward revision). The change represents a 2.7 percent gain in the ETI compared to a year ago.

"Despite the strong numbers on job creation in the past few months, the Employment Trends Index posted the largest one month decline since the Great Recession, with five of the eight components contributing negatively to the index," said Gad Levanon, Managing Director of Macroeconomic and Labor Market Research at The Conference Board. "While two of the components - initial claims for unemployment and our forecast of job openings - suggest modest adverse developments, their levels are still healthy. However, the past month's weakness in consumer confidence in job growth and the slowdown in temporary help needs careful watching. Overall, there is reason for caution to not linearly extrapolate the current strong growth into 2016."

November's decrease in the ETI was driven by negative contributions from five of the eight components. In order from the largest negative contributor to the smallest, these were: Ratio of Involuntarily Part-time to All Part-time Workers, Percentage of Respondents Who Say They Find "Jobs Hard to Get," Job Openings, Initial Claims for Unemployment Insurance, 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)

employment_indices.png

The graph above offsets the Conference Board ETI by 5 months. Note that the Conference Board is currently projecting an insignificantly declining growth rate and the Econintersect index is 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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