The U.S. Labor Market Continues To Add Jobs, But Slow-Down May Be Ahead
Job growth is expected to continue, but it may slow in the coming months. The Conference Board’s Employment Trends Index (ETI) decreased in October, reversing an increase registered in September, and the ETI now stands at 110.11, down from 110.87 a month earlier. The decrease marks a 0.4-percent decline in the ETI over the past 12 months. The Conference Board’s ETI for October coincides with the U.S. Bureau of Labor Statistics’ (BLS) report that total nonfarm payroll employment increased by 128,000 that month.
“The Employment Trends Index declined in October, with negative contributions from seven of its eight components. The index suggests that job growth may slow down a little in the coming months,” says Gad Levanon, head of The Conference Board Labor Market Institute. “Leading indicators of employment are sending a slightly gloomier message than [November first’s] stronger-than-expected jobs report. Still, with solid growth in consumer and government spending, and housing, the economy is likely to continue generating new jobs at a healthy rate, despite low business confidence.”
The Conference Board notes that October’s jobs gain is particularly notable in light of the General Motors strike, which was happening concurrently. It estimates the strike probably lowered overall employment by more than 50,000.
The main takeaway from the BLS’s report, the Board points out, is that the current trend in employment growth is higher than expected and is probably in the 150,000-200,000 range. With such solid employment growth, consumer spending is likely to remain strong into the holiday season and keep the U.S. economy growing despite cautious spending by businesses. The Federal Reserve has fewer reasons to keep lowering interest rates in such an economic environment. Also, the current employment growth is more than enough to continue tightening the labor market and drawing more people from the sidelines, which will continue to improve the labor market conditions of under-represented demographic groups.