Index Signals a Slowdown in Payroll
Additions is Likely in H2 2024
NEW
YORK, July 8, 2024 /PRNewswire/ -- The
Conference Board Employment Trends Index™ (ETI) decreased in June
to 110.27, from a downwardly revised 111.04 in May. The Employment
Trends Index is a leading composite index for payroll employment.
When the Index increases, employment is likely to grow as well, and
vice versa. Turning points in the Index indicate that a change in
the trend of job gains or losses is about to occur in the coming
months.
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"The ETI fell in June, continuing the downward trajectory
observed since the measure peaked in March
2022," said Will Baltrus,
Associate Economist at The Conference Board. "June's ETI
downtick signals employment could fall in the second half of 2024.
However, the index remains above its prepandemic level, and
payrolls growth remains healthy, albeit at a reduced pace compared
to the outsized gains experienced during the pandemic
recovery. While June's ETI suggests an aggregate reduction in
employment ahead, we anticipate the labor market will only cool
modestly. Indeed, as long as companies are willing to retain
workers, net nonfarm payrolls are likely to remain positive."
Baltrus added: "June's jobs report continued to reveal labor
market strength, as payrolls (+206,000) increased for a
41st consecutive month. Job gains were once again
concentrated in health care and social assistance and government,
with small month-over-month change in other industries. The labor
market remains resilient despite slowing real GDP growth because
many employers continue to hoard workers, despite rising labor
costs. This reflects the difficulty companies are facing in finding
workers: At 37%, the share of firms that report jobs are 'not
able to be filled right now'—a component of the ETI—remains
well above the average of 23% observed between July 2009 and January
2020, the period following the financial crisis and
immediately preceding the pandemic. This share is expected to
remain elevated as Baby Boomers retire. Companies are also hesitant
to downsize payrolls amid a slowing economy because the weakness
may be transitory, and rehiring workers after an economic soft
patch may be more expensive given persistent labor shortages.
"The unemployment rate edged up to 4.1% in June from 4.0% in
May, in line with our forecast. Initial claims for unemployment
insurance—another component of the ETI—rose in June to 238,500
from a weekly average of 222,300 in May. Despite these slight
upticks, measures of joblessness remain low, and the unemployment
rate is below the natural rate of unemployment (4.4%). Importantly,
jobseekers are reporting favorable conditions: The share of
respondents who report 'jobs are hard to get'—an ETI component
from the Consumer Confidence Survey®—declined in
June to 14.1% from 14.3% in May. While that share has gone up
relative to the pandemic recession's rapid-recovery phase, it
remains less than half of the July 2009–January 2020 average of
30.1%—a sign that jobseekers still have options when looking for
employment."
June's decrease in the Employment Trends Index was driven by
negative contributions from four of its eight components:
Percentage of Firms with Positions Not Able to Fill Right Now,
Number of Employees Hired by the Temporary-Help Industry, Initial
Claims for Unemployment Insurance, and Job Openings.
The Employment Trends Index aggregates eight leading indicators
of employment, 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 eight leading indicators of employment aggregated into the
Employment Trends Index include:
- Percentage of Respondents Who Say They Find "Jobs Hard to Get"
(The Conference Board Consumer Confidence
Survey®)
- Initial Claims for Unemployment Insurance (U.S. Department of
Labor)
- Percentage of Firms with Positions Not Able to Fill Right Now
(© National Federation of Independent Business Research
Foundation)
- Number of Employees Hired by the Temporary-Help Industry (U.S.
Bureau of Labor Statistics)
- Ratio of Involuntarily Part-time to All Part-time Workers
(BLS)
- Job Openings (BLS)*
- Industrial Production (Federal Reserve Board)*
- Real Manufacturing and Trade Sales (U.S. Bureau of Economic
Analysis)**
*Statistical imputation for the recent month
**Statistical imputation for two most recent
months
The Conference Board publishes the Employment Trends Index
monthly, at 10 a.m. ET, on the Monday
that follows each Friday release of the Bureau of Labor Statistics
Employment Situation report. The technical notes to this series are
available on The Conference Board website:
http://www.conference-board.org/data/eti.cfm.
About The Conference Board
The Conference Board
is the member-driven think tank that delivers trusted insights for
what's ahead. Founded in 1916, we are a non-partisan,
not-for-profit entity holding 501 (c) (3) tax-exempt
status in the United
States. www.conference-board.org.
Employment Trends
Index (ETI)™ 2024 Publication Schedule
|
Index Release Date
(10 AM ET)
|
Data for the
Month
|
Monday, January
8, 2024
|
December
2023
|
Monday, February
5
|
January 2024
|
Monday, March
11
|
February
|
Monday, April
8
|
March
|
Monday, May
6
|
April
|
Monday, June
10
|
May
|
Monday, July
8
|
June
|
Monday, August
5
|
July
|
Monday, September
9
|
August
|
Monday, October
7
|
September
|
Monday, November
4
|
October
|
Monday, December
9
|
November
|
|
|
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SOURCE The Conference Board