Written by Steven Hansen
The Conference Board’s Employment Trends Index – which forecasts employment for the next 6 months increased with the author’s saying “The speed of hiring may slow a little in the coming months as a result of weakening business confidence and a tightening labor market“.
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 accelerated by 1.2 % month-over-month and up by 0.7 % year-over-year. The Econintersect employment index also increased. Both of these indices are predicting growth 6 months from now.
From the Conference Board:
The Conference Board Employment Trends Index™ (ETI) increased in September, following a slight decline in August. The index now stands at 110.97, up from 110.73 (an upward revision) in August. The increase marks a 0.7 percent gain in the ETI over the past 12 months.
“The Employment Trends Index still remains on a flat trend since the summer of 2018. The behavior of the ETI is consistent with a continued expansion of the labor market, but perhaps at a slower rate,” said Gad Levanon, Head of The Conference Board Labor Market Institute. “Employment growth has clearly slowed in the past year, but the current pace of job creation remains strong enough to continue to tighten the labor market. The speed of hiring may slow a little in the coming months as a result of weakening business confidence and a tightening labor market.”
September’s increase was fueled by positive contributions from six of the eight components. From the largest positive contributor to the smallest, these were: Percentage of Respondents Who Say They Find “Jobs Hard to Get,” Initial Claims for Unemployment Insurance, Number of Employees Hired by the Temporary-Help Industry, Industrial Production, Real Manufacturing and Trade Sales, and the Ratio of Involuntarily Part-time to All Part-time Workers.
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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 6 months. Note that the Conference Board is currently projecting an improving 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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