Written by Steven Hansen
The Conference Board’s Employment Trends Index – which forecasts employment for the next 6 months recovered marginally for the fourth month after the coronavirus crash with the authors saying “Over the coming months, job growth will persist as industries impacted by social distancing such as travel, hotels, restaurants, and personal care will continue to recover“.
Analyst Opinion of Conference Board’s Employment Index
Econintersect evaluates the year-over-year change of this index (which is different than the headline view) – as we do with our own employment index. The year-over-year index growth rate accelerated by 1.2 % month-over-month and a negative 52.1 % year-over-year. The Econintersect employment index also remains in deep negative territory. Both of these indices are predicting softer job growth 6 months from now – however, because the decline was so rapid, it is likely the rebound will continue for the next few months. The bottom line is that I doubt you can forecast using traditional methods what employment will look like six months from today as we are living in a whole different world.
From the Conference Board:
The Conference Board Employment Trends Index™ (ETI) increased in August, following increases in May, June, and July. The index now stands at 52.55, up from 51.37 (an upward revision) in July. However, the index is down from 109.8 a year ago.
“Despite the rise in new COVID-19 cases at the beginning of the summer, job growth continues to gain momentum: the Employment Trends Index increased for the fourth consecutive month,” said Gad Levanon, Head of The Conference Board Labor Markets Institute. “Over the coming months, job growth will persist as industries impacted by social distancing such as travel, hotels, restaurants, and personal care will continue to recover. However, another wave of infections this fall would limit the expansion of the US labor market.”
August’s increase was fueled by positive contributions from six of the eight components. From the largest positive contributor to the smallest, the components were: Initial Claims for Unemployment Insurance; the Number of Employees Hired by the Temporary-Help Industry; the Ratio of Involuntarily Part-time to All Part-time Workers; Percentage of Firms With Positions Not Able to Fill Right Now; Job Openings; and Industrial Production.
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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.
The graph above offsets the Conference Board ETI by 6 months.
Caveats on the Employment Indices
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)
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