Employment Trends Index™ (ETI) Increased in May

Index Signals Payroll Additions Will Persist in H2 2024

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The Conference Board Employment Trends Index™ (ETI) increased in May to 111.44, from a downwardly revised 110.48 in April. The Employment Trends Index is a leading composite index for 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.

“The ETI rose in May, another small oscillation that we have continued to observe since the ETI started the downward trajectory its been on since a peak in March 2022,” said Will Baltrus, Associate Economist at The Conference Board. “May’s uptick signals employment could increase in the second half of 2024, but the ETI’s longer-term downward trajectory signals the high level of monthly increases in employment observed post-pandemic could slow down. That said, the Index remains far above its prepandemic level, which suggests aggregate job losses are less likely than a deceleration in hiring.”

Baltrus added: “May’s payrolls data showed an increase in employment (+272,000) for the 40^th consecutive month. Again, job gains were concentrated in health care and social assistance, leisure and hospitality, and government. But gains also broadened this month to other industries. This report shows again that the labor market remains resilient. Coincident labor shortages and difficulty hiring during the pandemic suggests employers will likely continue to hold on to workers. This is corroborated with Q2 data from the CEO Confidence Surveywhich shows a decrease in the amount of CEOs that are expecting to add to or cut from their workforce and an uptick in the proportion of CEOs that expect ‘little change’ into expansion or reduction of their workforce.

“May’s payroll data also showed a slight uptick in the unemployment rate to 4.0%, in line with our forecast, as initial claims for unemployment insurance (a component of the ETI) rose in May to 222,300 from a weekly average of 210,300 in April. Despite this slight uptick, the labor market still exhibits signs of tightness. According to our Consumer Confidence Survey, the share of respondents who report “jobs are hard to get” (another component of the ETI) declined in May to 13.5%, a sign that job seekers still have options when looking for employment. Moreover, the share of firms that report “jobs are hard to fill” (another component of the ETI) rose to 42% in May, a sign that employers are struggling to find suitable applicants for positions. Existing labor market tightness is expected to be exacerbated by retirees outpacing entrants into the labor force which suggests job cuts may not happen any time soon.”

May’s increase in the Employment Trends Index was driven by positive contributions from six of its eight components: Percentage of Respondents Who Say They Find “Jobs Hard to Get,” Job Openings, Percentage of Firms with Positions Not Able to Fill Right Now, Ratio of Involuntarily Part-time to All Part-time Workers, Industrial Production, and Real Manufacturing and Trade Sales.

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 Conference Board Employment Trends Index ™, January 2000 to Present       

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.

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The Conference Board Employment Trends Index™ and turning points, November 1973 to Present