Written by Steven Hansen
The Conference Board’s Employment Trends Index – which forecasts employment for the next 6 months – strengthened in January 2014.
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 push better employment in the coming months.
From the Conference Board:
The Conference Board Employment Trends Index™ (ETI) increased in January. The index now stands at 116.61, up from 115.62 (downwardly revised) in December. This represents a 6.0 percent gain in the ETI compared to a year ago.
“Despite weak job reports in December and January, the Employment Trends Index is not signaling a slowdown in employment growth,” said Gad Levanon, Director of Macroeconomic Research at The Conference Board. “We expect solid job growth and rapid declines in the unemployment rate to continue in the coming months.”
January’s increase in the ETI was driven by positive contributions from six of its eight components. In order from largest positive contributor to smallest, these were: Ratio of Involuntarily Part-time to All Part-time Workers, Initial Claims for Unemployment Insurance, Industrial Production, Real Manufacturing and Trade Sales, Number of Temporary Employees, and Consumer Confidence Survey® Percentage of Respondents Who Say They Find “Jobs Hard to Get.”
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 beginning in February.
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.