Written by Steven Hansen
The Conference Board’s Employment Trends Index – which forecasts employment for the next 6 months – rebounded relative to last month, but still forecasts a slower rate of job growth. Consider that this projected growth is six months from now.
Econintersect is also forecasting a lower jobs growth rate six months from now. Note that the Econintersect Employment Index is not based on employment data.
From the Conference Board:
The Conference Board Employment Trends Index™ (ETI) increased in December. The index now stands at 129.33, up from 128.27 in November. The change represents a 2.6 percent gain in the ETI compared to a year ago.
“The Employment Trends Index rebounded sharply in December, nearly erasing November’s entire decline,” said Gad Levanon, Managing Director of Macroeconomic and Labor Market Research at The Conference Board. “However, the slowdown in the ETI growth rate in recent months, combined with weak GDP growth in the fourth quarter, suggests that the pace of job growth is likely to slow in the coming months.”
December’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: Number of Temporary Employees, Percentage of Respondents Who Say They Find “Jobs Hard to Get,” Real Manufacturing and Trade Sales, Industrial Production, Job Openings, Percentage of Firms With Positions Not Able to Fill Right Now, and Ratio of Involuntarily Part-time to All Part-time Workers.
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 the Conference Board is currently projecting a declining growth rate and the Econintersect index is showing a marginally declining 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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