The Conference Board's Employment Trends Index - which forecasts employment for the next 6 months declined with the author's saying "This marks the fourth largest monthly negative contribution in the series history, which is potentially the result of noise rather than a more significant signal".
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 decelerated by 2.6 % month-over-month and grew 0.6 % year-over-year. The Econintersect employment index declined. Remember, both of these indices are predicting growth 6 months from now.
From the Conference Board:
The Conference Board Employment Trends Index™ (ETI) declined in June, following an increase in May. The index now stands at 109.51, down from 111.22 (a downward revision) in May. The decrease marks a 0.6 percent gain in the ETI over the past 12 months.
"The Employment Trends Index experienced a big drop in June, but this was primarily driven by a large negative contribution from one component - an increase in the percentage of respondents who say they find 'Jobs Hard to Get' in The Conference Board's Consumer Confidence Survey," said Gad Levanon, Chief Economist, North America, at The Conference Board. "This marks the fourth largest monthly negative contribution in the series history, which is potentially the result of noise rather than a more significant signal. We therefore interpret this month's large decline in the ETI with caution. With the US economy slowing a little, but still projected to remain above its 2 percent long-term trend, we expect job growth to remain strong enough to continue tightening the labor market and draw more people off the sidelines."
June's decrease was fueled by negative contributions from three of the eight components. From the largest negative contributor to the smallest, these were: Percentage of Respondents Who Say They Find "Jobs Hard to Get," Initial Claims for Unemployment Insurance, and Percentage of Firms With Positions Not Able to Fill Right Now.
(Click on image to enlarge)
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.
(Click on image to enlarge)
The graph above offsets the Conference Board ETI by 5 months. Note that the Conference Board is currently projecting a slowing growth rate (and the Econintersect index is forecasting an improving rate of growth over the next six months - but growth slowing at six months out).
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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