Written by Steven Hansen
The Conference Board’s Employment Trends Index – which forecasts employment for the next 6 months – strengthened in November 2013. This more than reverses the previous month’s decline which was due to the government shutdown.
The Conference Board believes future employment growth will likely be solid in the coming months – while Econintersect‘s own employment index is saying that economic pressures will continue to be weak but the trend will reverse early next year.
From the Conference Board:
The Conference Board Employment Trends Index™ (ETI) increased in November. The index now stands at 115.21, up from 113.64 (a downward revision) in October. The ETI figure for November is 5.3 percent higher than a year ago.
“Largely a reflection of the 16-day government shutdown, October’s apparent decline in the Employment Trends Index was more than reversed by the large November increase,” said Gad Levanon, Director of Macroeconomic Research at The Conference Board. “Despite disappointing consumer-demand growth in recent quarters, the ETI is still signaling solid employment growth in the months ahead.”
November’s increase in the ETI was driven by positive contributions from all eight of its components. From the largest positive contributor to the smallest, these were: Initial Claims for Unemployment Insurance, Percentage of Firms With Positions Not Able to Fill Right Now, Ratio of Involuntarily Part-time to All Part-time Workers, Industrial Production, Real Manufacturing and Trade Sales, Number of Temporary Employees, Consumer Confidence Survey® Percentage of Respondents Who Say They Find “Jobs Hard to Get,” 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 (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 weakening over the coming months but the trend will reverse as we enter the new year.
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.