Written by Steven Hansen
Pundits are still screaming about employment, and today the Conference Board reported their employment index fell for the first time in almost a year – but the decline was so modest that statistically one could say the index is unchanged.
This gives Econintersect one more chance to Monday morning quarterback the Jobs situation after the expectation dashing BLS jobs report on Friday. If pundits would stop focusing on the best jobs information they can find – and start looking at jobs data overall, they would find their understanding of the jobs situation is little changed since last month.
First a look at the Conference Boards March 2012 Employment Trends Index™ (ETI).
….. ETI decreased 0.18 percent in March to 107.28, down from the revised figure of 107.47 in February. The March figure is still up over 5 percent (5.2) from the same month a year ago.
“After five months of strong growth, the ETI declined slightly in March,” said Gad Levanon, Director of Macroeconomic Research at The Conference Board. “Together with the disappointing job growth released on Friday, and only moderate improvement in economic activity in recent months, it seems that employment growth in December to February, averaging almost 250,000 a month, may not be a sustainable trend.”
March’s decline in the ETI was driven by negative contributions from three of the eight components. The declining indicators – beginning with the largest negative contributor – were Percentage of Firms with Positions Not Able to Fill Right Now, Percentage of Respondents Who Say They Find “Jobs Hard to Get” and Number of Employees Hired by the Temporary-Help Industry.
To add context to this index, the following graph adds BLS non-farm payrolls and the Econintersect Employment Index to the ETI.
The graph above offsets the Conference Board ETI by 3 months. My take is that one month of data is not a trend – but even if it was this index is telling us that the rate of jobs growth should be unchanged in the coming months.
One more kick at the employment situation using ADP vs BLS data.
The above graph is year-over-year change in private non-farm employment growth with ADP (blue line) and BLS (red line). You will note that BLS’s rate of growth has been stronger then the ADP’s number for almost a year. The numbers now seem to be converging.
Likely we have some more months of less than excellent BLS numbers.
Caveats on the Employment Trends Index
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)
Unfortunately many of these indices are not accurate in real time being subject to at times significant backward revision.