Employment Trends Index™ (ETI) Increased in July

Index Signals Job Growth to Continue in the Second Half of 2023

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The Conference Board Employment Trends Index™ (ETI) increased in July to 115.45, up from a downwardly revised reading of 113.56 in June. 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 ticked up in July after two months of decline, signaling continued job growth in the coming months," said Selcuk Eren, Senior Economist at The Conference Board. “The Index peaked in March 2022 and has been on a slow downward trend since then but remains elevated and notably above pre-pandemic levels. We expect positive employment growth for the coming months even if the rate slows down. With continued strength in the labor market and elevated wage growth, we anticipate the Federal Reserve will raise interest target rates one more time”.

Eren added: “For the moment, the labor market is still tight. The Consumer Confidence Survey® suggests workers are very optimistic about employment conditions: In July, the proportion of consumers saying jobs are ‘hard to get’ fell back to single digits—and the lowest level since March 2022. Initial claims for unemployment insurance and involuntary part-time workers are very low. Job openings, while trending downwards, are still elevated compared to prepandemic levels—signaling continued labor market tightness. On the other hand, the number of employees working in temporary help services, an important early indicator for hiring in other industries, has been declining since it peaked in March 2022, suggesting slower job gains and eventually job losses. Looking ahead, we expect the Fed’s rate hikes will have a discernible impact on job growth, with likely job losses in early 2024. As a result, we forecast the unemployment rate to start ticking higher and rise to 4.2 percent by the middle of 2024, corresponding to around 700,000 job losses. However, we anticipate that jobs will quickly recover, and tight labor markets will return by the end of 2024.”

July’s increase in the Employment Trends Index was driven by positive contributions from four of its eight components: Percentage of Respondents Who Say They Find “Jobs Hard to Get”, Ratio of Involuntarily Part-time to All Part-time Workers, 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 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