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posted on 08 February 2016

January 2016 Conference Board Employment Index Improves Again

Written by Steven Hansen

The Conference Board's Employment Trends Index - which forecasts employment for the next 6 months - improved again this month "reducing the likelihood of further slowing in employment growth". Consider that this projected growth is six months from now.

Econintersect is forecasting a lower jobs growth rate 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) increased in January. The index now stands at 128.93, up from 128.71 in December (a downward revision). The change represents a 1.9 percent gain in the ETI compared to a year ago.

"The Employment Trends Index rose for the second month in a row, reducing the likelihood of further slowing in employment growth," said Gad Levanon, Managing Director of Macroeconomic and Labor Market Research at The Conference Board. "However, the temporary help industry component declined sharply in January, and because it is one of the best leading indicators of employment growth, we will monitor it closely in the coming months."

January'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: the Percentage of Respondents Who Say They Find "Jobs Hard to Get," Industrial Production, Real Manufacturing and Trade Sales, Percentage of Firms With Positions Not Able to Fill Right Now, and the 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 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 a declining growth rate and the Econintersect index is showing a marginally declining 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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