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 relative to last month. Consider that this projected growth is six months from now.
Econintersect is now forecasting marginally improving jobs growth six months from now.
From the Conference Board:
The Conference Board Employment Trends Index™ (ETI) increased in August for a second consecutive month. The index now stands at 128.82, up from 127.64 in June (a downward revision). The change represents a 4.5 percent gain in the ETI compared to a year ago.
“”The large increase in the Employment Trends Index in August suggests that a significant moderation in employment growth is unlikely to occur in the coming months,” said Gad Levanon, Managing Director of Macroeconomic and Labor Market Research at The Conference Board. “With solid job growth expected to continue, the unemployment rate is likely to go below 5 percent by year’s end.”
August’s increase in the ETI was driven by positive contributions from four of the eight components. In order from the largest positive contributor to the smallest, these were: Percentage of Respondents Who Say They Find “Jobs Hard to Get,” Percentage of Firms with Positions Not Able to Fill Right Now, Number of Temporary Employees, 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 a marginally improving rate of growth.
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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