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 “Despite the disappointing April jobs report, the Employment Trends Index significantly increased in April“.
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 36.3 % month-over-month and a positive 43.9 % 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 April, after an increase in March. The index now stands at 105.44, up from 102.65 (an upward revision) in March. The index is currently up 45.7 percent from a year ago.
“Despite the disappointing April jobs report, the Employment Trends Index significantly increased in April, suggesting strong employment growth in the coming months,” said Gad Levanon, Head of The Conference Board Labor Markets Institute. “Most of the Index’s components are rapidly improving. However, the number of employees in the temporary help industry, usually a strong leading indicator of employment, declined in April. Rather than signaling a weak outlook for job growth, it may reflect some substitution in employment as employers hire more regular employees and end contracts with temporary workers. In the coming months we expect job creation to continue, but at a possibly slower pace than expected in light of the latest job numbers. A slew of indicators measuring recruiting difficulties, quit rates, and wage growth suggest the US economy is experiencing an historical, though probably temporary, labor shortage. Among the shortage’s many effects, it may put a damper on job growth.”
April’s increase was driven by positive contributions from six of eight components. From the largest positive contributor to the smallest, the components were: Initial Claims for Unemployment Insurance; Percentage of Respondents Who Say They Find “Jobs Hard to Get”; Ratio of Involuntarily Part-time to All Part-time Workers; Real Manufacturing and Trade Sales; Industrial Production; and Percentage of Firms With Positions Not Able to Fill Right Now.
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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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