The Conference Board's Employment Trends Index - which forecasts employment for the next 6 months improved with the author's saying "With the economy growing well above trend, and the working-age population barely growing at all, we expect the labor market to significantly tighten in the coming year.".
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Analyst Opinion of Conference Board's Employment Index
Econintersect evaluates 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 0.3 % month-over-month and 4.9 % year-over-year. Also note that the Conference Board revised downward the last three month's data.
From the Conference Board:
The Conference Board Employment Trends Index™ (ETI) increased in April, after increasing in March. The index now stands at 108.08, up from 107.37 (a downward revision) in March. The change represents a 4.9 percent gain in the ETI compared to a year ago.
"In recent months, the Employment Trends Index continued to improve, signaling that employment growth will remain solid through the summer," said Gad Levanon, Chief Economist, North America, at The Conference Board. "With the economy growing well above trend, and the working-age population barely growing at all, we expect the labor market to significantly tighten in the coming year. At 3.9 percent, the unemployment rate is historically low, and we expect it to be around 3.5 percent a year from now."
April's increase in the ETI was fueled by positive contributions from seven out of the eight components, with one component's contribution being neutral. From the largest positive contributor to the smallest, these were: Industrial Production, Initial Claims for Unemployment Insurance, Percentage of Respondents Who Say They Find "Jobs Hard to Get," Job Openings, Real Manufacturing and Trade Sales, Number of Employees Hired by the Temporary-Help Industry, and Ratio of Involuntarily Part-time to All Part-time Workers. The Percentage of Firms With Positions Not Able to Fill Right Now made a neutral contribution.
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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. Econintersectuses non-labor and mostly non-monetary economic pulse points in constructing its index, while The Conference Board uses mostly elements of employment data.
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The graph above offsets the Conference Board ETI by 5 months. Note that the Conference Board is currently projecting an slowing growth rate (and the Econintersect index is forecasting an improving rate of growth over the next six 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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