Job Growth, Expectations Positive Despite Contrary Indicators
Concerns over job availability lowered The Conference Board’s Employment Trends Index in June, following an uptick in May. The index now stands at 109.51, down from 111.22 one month earlier, although still up 0.6 percent over the past 12 months. In contrast, the U.S. added 224,000 nonfarm payroll jobs in June, ahead of expectations.
“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,” says 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 U.S. economy slowing a little, but still projected to remain above its two 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.”
Regarding the government’s June job growth figures, The Conference Board notes that while employment growth in 2019 is clearly slower than in 2018, the change is modest thus far and the June jobs report reduces concerns about a more significant slowdown in the U.S. economy. The manufacturing sector added 17,000 jobs in June, after essentially no growth in the previous three months, and the number of jobs in the temporary help industry, one of the best leading indicators of employment, is growing again in the second quarter, after dropping in the first quarter.
The Conference Board expects the U.S. economy to continue to grow slightly above its long-term two percent trend through at least the end of the year, generating enough job growth to continue tightening the labor market.