U.S. employment growth was strong in April, adding 263,000 jobs according to the Bureau of Labor Statistics, and its health was reflected in The Conference Board’s Employment Trends Index (ETI), which increased slightly following a decline in March. The index ended the month at 110.79, up from 110.73 from the month before and indicating a 2.3 percent increase over the year-ago figure.

While the country’s April job growth, along with other indicators, have largely dispelled fears of a slowdown in the U.S. economy, the realities of an already tight labor market point to the pace of job growth moderating in the coming months. Gad Levanon, chief economist, North America, for The Conference Board, says, “In the past month, most economic releases came out better than expected, suggesting that the U.S. economy will continue to grow above its long-term two percent trend through at least the end of the year with low near-term recession risks. Today’s employment growth strengthens this point of view. The strong recovery in temporary-help employment, one of the best leading indicators of the labor market, further reduces the risk of an employment slowdown.”

Levanon adds, “In such an economic environment, and considering the stagnation in working-age population growth, it is not surprising that the labor market continues to tighten. The unemployment rate reached 3.6 percent in April, the lowest rate since December 1969. Labor markets will continue tightening in coming months and wages are likely to accelerate further. The recovery in the U.S. economy and the ongoing labor market squeeze are likely to further shift the Federal Reserve away from considering a rate cut in 2019.”

In determining its Employment Trends Index, the Conference Board aggregates eight labor market indicators that it has found are accurate within their own areas. It notes that aggregated individual indicators are placed into a composite index to filter out “noise” and show underlying trends more clearly. March’s increase was fueled by positive contributions from five of the eight components. From the largest positive contributor to the smallest, these were: Percentage of Respondents Who Say They Find “Jobs Hard to Get,” the Number of Employees Hired by the Temporary-Help Industry, Real Manufacturing and Trade Sales, Industrial Production and Initial Claims for Unemployment Insurance.

Levanon says, “The Employment Trends Index increased slightly in April, but has been moving mostly sideways in recent months. The behavior of the ETI in recent months suggests that employment will grow more slowly in the coming quarters than it did in the past year, which is to be expected in such a tight labor market.”