Written by Steven Hansen

The Conference Board’s Employment Trends Index – which forecasts employment for the next 6 months declined with the authors saying it is “The drop in February was the result of a large negative contribution from the ‘Jobs Hard to Get’ component.“

From the Conference Board:

The Conference Board Employment Trends Index™ (ETI) declined in February, following an increase in January. The index now stands at 108.96, down from 109.85 (a downward revision) in January. The index is down 1.3 percent from a year ago.

“The Employment Trends Index declined in February, following a strong increase in January,” said Gad Levanon, Head of The Conference Board Labor Markets Institute. “The drop in February was the result of a large negative contribution from the ‘Jobs Hard to Get’ component. The total contribution of the other seven components was slightly positive. We therefore do not interpret the drop in the ETI in February as a sign of a weakening labor market prior to the COVID-19 outbreak. The outbreak had little impact, if any, on the index in February.”

Despite strong job growth over the last three months, the prospects for the coming months are uncertain. “The impact of the COVID-19 outbreak on the labor market will depend on the amount of time it disrupts economic activity in the US,” adds Levanon. “If the economy resumes its previous course by April or May, the impact over the next few months will primarily be reflected in a drop in hours worked and perhaps in reduced hiring among the most impacted industries. However, if economic activity remains disrupted through early summer, then companies in travel, entertainment, lodging, food and hospitality are likely to reduce their workforce, including layoffs, especially of less skilled workers.”

February’s decrease was fueled by negative contributions from five of the eight components. From the largest negative contributor to the smallest, these were: The Percentage of Respondents Who Say They Find “Jobs Hard to Get,” the Ratio of Involuntarily Part-time to All Part-time Workers, Job Openings, Initial Claims for Unemployment Insurance, 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 6 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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