October Employment Indicators Point To Job Market Improvement

The Conference Board’s Employment Trends Index (ETI) increased in October to 129.48, up from 128.65 in September. The change represents a 4.1 percent gain in the ETI compared to a year ago. On Friday, the U.S. Bureau of Labor Statistics announced that the country had added 271,000 jobs in October, and that the unemployment rate slipped to five percent.

“The Employment Trends Index continues to show solid and broad-based gains, with no significant slowdown in job growth expected through the first quarter of 2016,” says Gad Levanon, managing director of macroeconomic and labor market research at The Conference Board. “Solid job growth and the lack of recovery in labor-force participation suggest that the unemployment rate may dip below 4.5 percent by this time next year.”

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. The Conference Board points to positive contributions from six of the eight components of its index for October’s increase in the ETI. In order from the largest positive contributor to the smallest, these were: Ratio of Involuntarily Part-time to All Part-time Workers, Number of Temporary Employees, Real Manufacturing and Trade Sales, Industrial Production, Initial Claims for Unemployment Insurance, and Job Openings. The other two indicators in the index are the percentage of respondents who say they find jobs “hard to get” in The Conference Board’s Consumer Confidence Survey, and the percentage of firms with positions they are not able to fill right now, from the National Federation of Independent Business Research Foundation.

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