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 “Leading indicators of employment are sending a slightly gloomier message than Friday’s stronger-than-expected jobs report“.
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 1.0 % month-over-month and down by 0.4 % year-over-year. The Econintersect employment index increased. Both of these indices are predicting soft job growth 6 months from now with the Conference Board’s index rate of growth relatively unchanged with the Econintersect index showing improving growth.
From the Conference Board:
The Conference Board Employment Trends Index™ (ETI) decreased in October, following an increase in September. The index now stands at 110.11, down from 110.87 (a downward revision) in September. The decrease marks a 0.4 percent decline in the ETI over the past 12 months.
“The Employment Trends Index declined in October, with negative contributions from seven of its eight components. The index suggests that job growth may slow down a little in the coming months,” said Gad Levanon, Head of The Conference Board Labor Market Institute. “Leading indicators of employment are sending a slightly gloomier message than Friday’s stronger-than-expected jobs report. Still, with solid growth in consumer and government spending, and housing, the economy is likely to continue generating new jobs at a healthy rate, despite low business confidence.”
October’s decrease was fueled by negative contributions from seven 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,” the Ratio of Involuntarily Part-time to All Part-time Workers, Industrial Production, Percentage of Firms With Positions Not Able to Fill Right Now, Initial Claims for Unemployment Insurance, Number of Employees Hired by the Temporary-Help Industry, and Job Openings.
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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 a relatively unchanged growth rate (and the Econintersect index is forecasting an improving rate of growth six months from now.
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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