April 2013 Conference Board Employment Index Improves Marginally

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The Conference Board’s Employment Trends Index – which forecasts employment for the next 6 months – rose marginally in its April 2013 release.

  • The Conference Board believes their index continues to signal moderate employment growth;
  • Econintersect‘s own employment index is saying that economic pressures should lead to better employment numbers in the coming months.

From the Conference Board:

The Conference Board Employment Trends Index™ (ETI) increased in April. The index now stands at 111.68, up from 111.61 (an upward revision) in March. The April figure is 3.8 percent higher than a year ago.

“Despite weak economic activity, the Employment Trends index is still signaling moderate job growth in the coming months,” said Gad Levanon, Director of Macroeconomic Research at The Conference Board. “On average, employment has grown almost as fast as GDP over the past three years, and that is likely to continue into the third quarter of 2013. As a result, the average labor productivity of American workers will struggle to improve until GDP growth accelerates.”

April’s improvement in the ETI was driven by positive contributions from five of its eight components. The increasing indicators — from the largest positive contributor to the smallest — were Number of Temporary Employees, Initial Claims for Unemployment Insurance, Job Openings, Industrial Production, and Real Manufacturing and Trade Sales.

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.

To add context to this index, the following graph compares BLS non-farm payrolls and the Econintersect Employment Index to the 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 (red line, left axis) and The Conference Board ETI (yellow line, right axis)

/images/employment_indices.png

The graph above offsets the Conference Board ETI by 6 months. Econintersect sees employment strengthening over the coming months. The bottom line is that jobs growth should continue.

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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