Written by Steven Hansen
The Conference Board’s Employment Trends Index – which forecasts employment for the next 6 months – rose moderately in July 2013.
The Conference Board believes future employment growth will remain constant – while Econintersect‘s own employment index is saying that economic pressures should weaken and lead to poorer employment dynamics starting in a few months.
From the Conference Board:
The Conference Board Employment Trends Index™ (ETI) increased in July. The index now stands at 112.16, up from 111.67 (an upward revision) in June. The ETI figure for July is 4.1 percent higher than a year ago.
“The Employment Trends Index continues to grow moderately, suggesting no major changes are expected in the pace of job growth,” said Gad Levanon, Director of Macroeconomic Research at The Conference Board. “With economic activity remaining weak through the second quarter, solid employment growth continues to be a positive surprise. Jobs may grow faster in the coming quarters as the U.S. economy is likely to get stronger towards the end of 2014.”
July’s improvement in the ETI was driven by positive contributions from seven of its eight components. The increasing indicators — from the largest positive contributor to the smallest — were Consumer Confidence Survey® Percentage of Respondents Who Say They Find “Jobs Hard to Get,” Percentage of Firms With Positions Not Able to Fill Right Now, Initial Claims for Unemployment Insurance, Real Manufacturing and Trade Sales, Number of Temporary Employees, Industrial Production, and 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 (red line, left axis) and The Conference Board ETI (yellow line, right axis)
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 strengthen.
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.