Written by Steven Hansen
Today the Conference Board reported their April employment index rose moderately after falling marginally last month.
This gives Econintersect one more chance to Monday morning quarterback the Jobs situation after the BLS jobs report on Friday – second bad report in a row. As Econintersect has continued to remind its readers, a 2% growth economy is not up to producing a lot of jobs – and it now appears that the good jobs growth seen in the recent past is reverting to a more typical growth based on the current dynamics.
First a look at the Conference Boards April 2012 Employment Trends Index™ (ETI).
….. ETI increased 0.8 percent in April to 108.04, up from the revised figure of 107.18 in March. The April figure is 7.1 percent higher than a year ago.
“The growth in the Employment Trends Index in recent months is signaling moderate improvements in employment,” said Gad Levanon, Director of Macroeconomic Research at The Conference Board. “We did not expect employment growth in December to February, averaging almost 250,000 a month, to continue. However, the disappointing job gain in April (115,000) is probably below the current trend and should pick up to about 150,000-175,000 jobs a month through the summer.”
April’s increase in the ETI was driven by positive contributions from five of the eight components. The improving indicators – beginning with the largest positive contributor – were Percentage of Firms with Positions Not Able to Fill Right Now, Percentage of Respondents Who Say They Find “Jobs Hard to Get,” Industrial Production, Number of Employees Hired by the Temporary-Help Industry and Real Manufacturing and Trade Sales.
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 neither Econintersect or The Conference Board ETI is mimicking the actual BLS jobs data. The Conference Board tries to predict turning points (which it appears to be good at) – but is unable to predict the intensity of the upward or downward movements. Econintersect attempts to predict intensity of movement (which it appears it is much better at than the ETI) – and is predicting a continuing weakening of the labor market (which the labor market until recently has not obliged).
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. It appears the BLS numbers are converging on the ADP numbers.
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.