Written by Steven Hansen
The Conference Board’s Employment Trends Index – which forecasts employment for the next 6 months significantly declined with the authors saying “the total number of workers is likely to remain well below pre-COVID-19 levels for the remainder of the year, and the unemployment rate will remain in double digits after peaking at 15 percent in May“
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 47 % month-over-month and a negative 45 % year-over-year. The Econintersect employment index also slowed. Both of these indices are predicting softer job growth 6 months from now.
From the Conference Board:
The Conference Board Employment Trends Index™ (ETI) plummeted in March, following a decline in February. The index now stands at 60.39, down from 109.27 (an upward revision) in February. The index is down 45.0 percent from a year ago.
“The Employment Trends Index plummeted in March, almost entirely due to the historically large increase in initial claims for unemployment,” said Gad Levanon, Head of The Conference Board Labor Markets Institute. “This period of declining employment is historically severe but could also be historically short. The most likely scenario is that within a couple of months, most of the orders to shut down non-essential businesses and stay at home will be lifted. While many employers will continue to shed workers after that time, these job losses will be more than offset by the millions who will return to work in the reopened businesses. Nevertheless, the total number of workers is likely to remain well below pre-COVID-19 levels for the remainder of the year, and the unemployment rate will remain in double digits after peaking at 15 percent in May.”
March’s decrease was fueled by negative contributions from seven of the eight components. From the largest negative contributor to the smallest, these were: Initial Claims for Unemployment Insurance, the Ratio of Involuntarily Part-time to All Part-time Workers, the Number of Employees Hired by the Temporary-Help Industry, the Percentage of Firms With Positions Not Able to Fill Right Now, Job Openings, Real Manufacturing and Trade Sales, and Industrial Production.
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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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