Written by Steven Hansen
The Conference Board’s Employment Trends Index – which forecasts employment for the next 6 months declined with the author’s saying “The decline in the Employment Trends Index in May is probably a reversion to trend after the very rapid increases in recent months“.
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 decelerated 0.9 % month-over-month and 3.9 % year-over-year.
From the Conference Board:
The Conference Board Employment Trends Index™ (ETI) decreased in May, after five consecutive monthly gains. The index now stands at 107.69, down from 108.00 (a downward revision) in April. The change represents a 3.9 percent gain in the ETI compared to a year ago.
“The decline in the Employment Trends Index in May is probably a reversion to trend after the very rapid increases in recent months,” said Gad Levanon, Chief Economist, North America, at The Conference Board. “With the economy growing well above trend, we expect solid job growth to continue despite the difficulty in filling job openings.”
May’s decline in the ETI was fueled by negative contributions from six out of the eight components. From the largest negative contributor to the smallest, these were: The Percentage of Firms With Positions Not Able to Fill Right Now, Percentage of Respondents Who Say They Find “Jobs Hard to Get,” Job Openings, Number of Employees Hired by the Temporary-Help Industry, Initial Claims for Unemployment Insurance, and the Ratio of Involuntarily Part-time to All Part-time Workers. Real Manufacturing and Trade Sales and Industrial Production made a positive contribution.
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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 slowing growth rate (and the Econintersect index is forecasting 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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