Written by Steven Hansen
The Conference Board’s Employment Trends Index – which forecasts employment for the next 6 months – improved – and the rate of growth improved over last month.
Econintersect is forecasting slowing jobs growth beginning in June.
From the Conference Board:
The Conference Board Employment Trends Index™ (ETI) increased in April. The index now stands at 128.22, up from 127.15 (a downward revision) in March. The change represents a 5.8 percent gain in the ETI compared to a year ago.
“April’s bounceback in the Employment Trends Index is somewhat reassuring, but expectations remain that job growth will be slower this year compared with last year,” said Gad Levanon, Managing Director of Macroeconomic and Labor Market Research at The Conference Board. “Given that the labor force is barely expanding, job growth of about 200,000 per month will be sufficient to continue rapidly lowering the unemployment rate.”
April’s increase in the ETI was driven by positive contributions from seven of the eight components. In order from the largest positive contributor to the smallest, these were: Percentage of Firms with Positions Not Able to Fill Right Now, Ratio of Involuntarily Part-time to All Part-time Workers, Real Manufacturing and Trade Sales, Number of Employees Hired by the Temporary-Help Industry, Initial Claims for Unemployment Insurance, Job Openings, and Industrial Production.
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 YoY Improvement (red line, left axis) and The Conference Board ETI YoY Improvement (yellow line, right axis)
employment_indices.png
The graph above offsets the Conference Board ETI by 5 months. Note that both the Conference Board and the Econintersect indices are showing an improving long term trend – however the Conference Board ETI trend line is slowing whilst the Econintersect trend line is not.
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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