Written by Steven Hansen
The Conference Board’s Employment Trends Index – which forecasts employment for the next 6 months declined suggesting “that the rapid job growth in recent months is likely to slow down“. Consider that this projected growth is six months from now.
Econintersect is 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) dipped down in February. The index now stands at 129.09, down from 129.15 in January (an upward revision). The change represents a 2.1 percent gain in the ETI compared to a year ago.
“The flatness of the Employment trends index since September suggests that the rapid job growth in recent months is likely to slow down,” said Gad Levanon, Managing Director of Macroeconomic and Labor Market Research at The Conference Board. “In particular, we are concerned about the temporary help industry component, one of the most powerful leading indicators of employment growth, which has declined for the second month in a row in February.”
February’s decrease in the ETI was driven by negative contributions from five of the eight components. In order from the largest negative contributor to the smallest, these were: the Percentage of Respondents Who Say They Find “Jobs Hard to Get,” Percentage of Firms With Positions Not Able to Fill Right Now, Real Manufacturing and Trade Sales, Number of Employees Hired by the Temporary-Help Industry, 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.
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)
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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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