U.S. Employment Trends Track Upwards In October
The Conference Board’s Employment Trends Index (ETI) returned to positive growth in October after ticking downward in September. In October, the Index stood at 110.72, up from 110.39 in September, representing a 4.6 percent gain in the year-ago level. The ETI increase comes as the Bureau of Labor Statistics reports that the U.S. added 250,000 nonfarm jobs in October and that the unemployment rate remained unchanged at 3.7 percent.
“After last month’s decline, The Employment Trends Index bounced back and is signaling solid employment growth through the winter,” says Gad Levanon, chief economist, North America, at The Conference Board. “The main determinants of wage growth—economic growth, a tight labor market, faster inflation and labor productivity growth—are all aligning to accelerate wage growth. Higher labor costs are putting pressure on corporate profits and provide additional incentive for businesses to cut costs through efficiency gains and automation, as well as pass the higher costs on to consumers, fueling inflation. At the same time, higher interest rates will slow down the U.S. economy in 2019. On the positive side, better labor market conditions are likely to continue to draw more workers from the sidelines and raise job satisfaction for existing workers.”
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 into a composite index filters out “noise” to show underlying trends more clearly. October’s increase was fueled by positive contributions from five of the eight components. From the largest positive contributor to the smallest, these were: the percentage of respondents who say they find “jobs hard to get,” industrial production, real manufacturing and trade sales, the ratio of involuntarily part time to all part-time workers, and the number of employees hired by the temporary-help industry. Indicators not factoring into this month’s increase include initial claims for unemployment insurance from the U.S. Department of Labor; the percentage of firms With positions not able to fill right now, which comes from the National Federation of Independent Business Research Foundation; and the Bureau of Labor Statistics’ Job Openings data.