Employment Trends Index Ticks Up Despite September Job Creation Falling Below Expectations
The Conference Board reports that its Employment Trends Index (ETI) increased slightly in September. The index now stands at 128.76, up from 128.66 in August, representing a 4.6 percent gain in the ETI compared to a year ago. The Conference Board’s findings come after the Labor Department reported last week that the U.S. economy created 142,000 jobs in September, below expectations. Unemployment held steady at 5.1 percent.
“While Friday’s job report was a disappointment, and the trend in job growth is probably slower than in the last couple of years, the Employment Trends Index does not suggest a negative shock will impact the labor market any time soon,” says Gad Levanon, managing director of macroeconomic and labor market research at The Conference Board. “Slower job growth is more in line with the mediocre GDP growth of recent years, and also suggests that the very low productivity growth during that time is not sustainable.”
The ETI 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. September’s increase in the ETI was driven by positive contributions from five of the eight components. In order from the largest positive contributor to the smallest, these were: Ratio of Involuntarily Part-time to All Part-time Workers, Job Openings, Initial Claims for Unemployment Insurance, Real Manufacturing and Trade Sales, and Number of Temporary Employees.
Other indicators aggregated into the ETI include the percentage of respondents who say they find “jobs hard to get” from The Conference Board’s Consumer Confidence Survey; the percentage of firms with positions they are unable to fill right now, reported by the National Federation of Independent Business Research Foundation; and the Federal Reserve Board’s industrial production numbers.