The Conference Board Employment Trends Index™ (ETI) Decreased in June

Index Signals a Slowdown in Payroll Additions is Likely in H2 2024

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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.

“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 41^st 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 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