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 “After growing rapidly through most of 2017 and 2018, the Employment Trends Index has been fluctuating around a flat trend in recent months, suggesting that employment growth will continue, but at a slower rate through the summer“.
Analyst Opinion of Conference Board’s Employment Index
Econintersect evaluates the 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 by 1.2 % month-over-month and grew 3.1 % year-over-year. The Econintersect employment index likewise declined a similar amount.
Note that Econintersect’s employment index was not affected by the government shutdown.
From the Conference Board:
The Conference Board Employment Trends Index™ (ETI) declined in March, following an increase in February. The index now stands at 110.98, down from 111.62 (an upward revision) in February. Despite the decrease this month, there has been a 3.1 percent gain in the ETI over the past 12 months.
“After growing rapidly through most of 2017 and 2018, the Employment Trends Index has been fluctuating around a flat trend in recent months, suggesting that employment growth will continue, but at a slower rate through the summer,” said Gad Levanon, Chief Economist, North America, at The Conference Board. “Particularly concerning was the decline in the number of workers employed by the Temporary-Help Industry, an important leading indicator and component of the ETI, which declined by one percent in the past three months. The main trends in the US labor market – including growing employment and labor force participation, tightening labor markets and accelerating wages – are likely to continue in 2019, but more modestly.”
March’s decrease was fueled by negative contributions from three of the eight components. From the largest negative contributor to the smallest, these were: Percentage of Respondents Who Say They Find “Jobs Hard to Get,” Ratio of Involuntarily Part-time to All Part-time Workers, and the Number of Employees Hired by the Temporary-Help Industry.
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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 a slowing growth rate (and the Econintersect index is forecasting an improving rate of growth over the next six months – but growth slowing at six months out).
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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