Labor Shortages

Index Signals Job Growth Likely to Continue in the Rest of 2023

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The Conference Board Employment Trends Index™ (ETI) increased in September to 114.66, from an upwardly revised 114.16 in August. The ETI 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 slightly in September, signaling continued job growth ahead," said Selcuk Eren, Senior Economist at The Conference Board. “The Index has been on a slow downward trend since it peaked in March 2022, but remains well above prepandemic levels. This suggests the US economy will continue adding jobs through the remainder of 2023 and into next year, even if the rate of growth slows. With job gains remaining robust and wage growth still elevated, we expect the Federal Reserve to raise interest rates in November and keep rates higher for longer.”

Eren added: “Several components of the ETI confirm that US labor markets are still tight. Initial claims for unemployment insurance remain very low, as does the ratio of workers who work part-time because they can’t find full-time positions. Likewise, the percentage of firms reporting difficulty filling their vacant positions ticked up in September.

“Meanwhile, the number of employees working in temporary help services—an important early indicator for hiring in other industries—continues to fall after peaking in March 2022 and the proportion of consumers who said jobs were ‘hard to get’ in The Conference Board Consumer Confidence Survey® increased. Looking ahead, we expect the Fed's rate hikes to gradually slow job growth, with job losses likely to start in Q2 2024. Our latest US forecast sees the unemployment rate rising to 4.2 percent by the second half of 2024, corresponding to around 700,000 job losses. However, we expect the recession to be short-lived and jobs to quickly recover by the end of next year."

September’s increase in the Employment Trends Index was driven by positive contributions from four of its eight components: Initial Claims for Unemployment Insurance, Ratio of Involuntarily Part-time to All Part-time Workers, Percentage of Firms with Positions Not Able to Fill Right Now, and Industrial Production.

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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Jonathan.Liu@tcb.org

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