Written by Steven Hansen
The Conference Board’s Employment Trends Index – which forecasts employment for the next 6 months improved with the author’s saying “We interpret Friday’s disappointing job numbers as noise in an otherwise fast-growing labor market“.
Analyst Opinion of Conference Board’s Employment Index
Econintersect evaluates 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 improved 0.1 % month-over-month and 5.5 % year-over-year.
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 March, after increasing in February. The index now stands at 107.72, up from 107.31 (a downward revision) in February. The change represents a 5.5 percent gain in the ETI compared to a year ago. “The ETI continued its upward trend in March, suggesting that job growth will remain robust in the coming months,” said Gad Levanon, Chief Economist, North America, at The Conference Board. “We interpret Friday’s disappointing job numbers as noise in an otherwise fast-growing labor market.” March’s increase in the ETI was fueled by positive contributions from five out of the eight components. From the largest positive contributor to the smallest, these were: Ratio of Involuntarily Part-time to All Part-time Workers, Industrial Production, Percentage of Firms With Positions Not Able to Fill Right Now, Percentage of Respondents Who Say They Find “Jobs Hard to Get,” and Real Manufacturing and Trade Sales
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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 5 months. Note that the Conference Board is currently projecting an relatively stable growth rate (and the Econintersect index is showing an improving rate of growth over the next six 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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