Written by Steven Hansen
The Conference Board’s Employment Trends Index – which forecasts employment for the next 6 months – significantly increased with the authors saying “The Employment Trends Index significantly increased in March and signals that job growth will be very strong over the coming months“.
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 16.3 % month-over-month and a positive 7.5 % year-over-year. The Econintersect employment index is now in positive territory but now declining and we are predicting slowing growth over the next 6 months.
The Conference Board index is predicting improving job growth 6 months from now. The bottom line is that I doubt you can forecast using traditional methods what employment will look like six months from today as we are living in a whole different world.
From the Conference Board:
The Conference Board Employment Trends Index™ (ETI) significantly increased in March, after a small decrease in February. The index now stands at 102.44, up from 100.01 (a downward revision) in February. The index is currently up 7.7 percent from a year ago.
“The Employment Trends Index significantly increased in March and signals that job growth will be very strong over the coming months,” said Gad Levanon, Head of The Conference Board Labor Markets Institute. “Despite the recent increase in infection rates, the vaccination campaign is progressing at a rate that should significantly reduce the spread of the virus in the next couple of months. Labor intensive in-person services will continue to reopen, and consumers flush with cash due to a year of elevated savings and strong government stimulus will be willing and able to spend. All this will lead to historically fast employment growth in the coming quarters. We expect the unemployment rate to reach about four percent a year from now, and further decline for the rest of 2022. Tight labor markets and labor shortages will resurface in the coming year, leading to faster wage growth.”
March’s increase was driven by positive contributions from seven of eight components. From the largest positive contributor to the smallest, the components were: Percentage of Respondents Who Say They Find “Jobs Hard to Get”; Initial Claims for Unemployment Insurance; Ratio of Involuntarily Part-time to All Part-time Workers; Real Manufacturing and Trade Sales; Industrial Production; Percentage of Firms With Positions Not Able to Fill Right Now; 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.
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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