U.S. Employment Climbs Following Hurricane-Induced Lull
U.S. employment has rebounded after a recent downturn following the hurricanes that hit the country just a few months ago. The Conference Board Employment Trends Index, which declined in September and August, increased sharply in October. It stands at 135.57, up from 132.86 in September. The change represents a 5.4 percent gain compared to a year ago.
“The bounce back in the Employment Trends Index in October was one of the largest monthly increases ever, and comes after two declines because of the hurricanes,” says Gad Levanon, chief economist, North America, at The Conference Board. “As expected, the ETI picked up and continued its strong upward trend, suggesting that employment growth will remain solid in the coming months.”
The effects of the hurricanes make it difficult to gauge current trends, but The Conference Board sees a tightening labor market. In October, U.S. employment increased by 261,000 jobs—following a very modest 18,000 jobs in September—and the unemployment rate declined to 4.1 percent, the lowest rate since December 2000. Levanon says, “The broad measure of labor market slack, U6, which was slower than the unemployment rate to recover, reached 7.9 percent in October, equaling the pre-recession low. The labor force participation rate dropped to 62.7 percent, further suggesting that higher labor force participation is unlikely to be a significant solution to the growing shortage of workers.
“In the past three months, average job growth was 162,000, suggesting that the gradual slowdown in job growth continues. The U.S. economy has been growing at a faster pace in recent quarters, yet this has not been leading to faster employment growth. In a tight labor market, employers are struggling to fill positions and therefore are attempting to meet demand by raising the productivity of their existing workers through increased investment.”
In calculating its Employment Trends Index, The Conference Board aggregates eight labor-market indicators that it considers accurate in their own areas. Aggregating indicators into a composite index filters out “noise,” more clearly revealing trends within the data. The indicators come from the U.S. Department of Labor, the U.S. Bureau of Labor Statistics, the Federal Reserve Board and other sources. It attributes October’s increase to positive contributions from all eight components. From the largest positive contributor to the smallest, these were: Initial Claims for Unemployment Insurance, Percentage of Firms with Positions Not Able to Fill Right Now, Ratio of Involuntarily Part-time to All Part-time Workers, Industrial Production, Real Manufacturing and Trade Sales, Number of Employees Hired by the Temporary-Help Industry, Consumer Confidence “Jobs Hard to Get” Percentage, and Job Openings.