Labor Shortages

Robust Job Gains Expected Over the Coming Months

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The Conference Board Employment Trends Index™ (ETI) rose in February to 118.29 from a downwardly revised 118.14 in January 2023. 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 turning point in the number of jobs is about to occur in the coming months.

“The Employment Trends Index increased in February, but it has mainly been moving sideways over the past year,” said Frank Steemers, Senior Economist at The Conference Board. “So far, job growth in 2023 has been strong and the Index remaining quite high signals that solid job gains will likely continue over the next months. With such a strong labor market and wage growth still elevated, the Federal Reserve will likely continue to further increase interest rates in its mission to lower inflation.”

Steemers added: “While the labor market remains resilient, higher interest rates are expected to negatively impact job growth later in 2023. Signs of cooling are already visible in some industries. Job gains have slowed in transportation and warehousing, finance and insurance, and layoffs have already been implemented in the information services sector, which includes tech companies. The recent steep decline in job openings in construction may foreshadow reduced hiring over the next months as higher interest rates reduce demand for new construction projects. However, health care and social assistance and leisure and hospitality continue their rapid pace of hiring. Strong demand for workers is becoming more in balance with labor supply as participation rates have risen over the last months. Participation for those aged 25 to 54 is now back at its prepandemic rate of 83.1 percent. Nevertheless, labor shortages remain severe and are unlikely to disappear soon.”

February’s increase in the Employment Trends Index was driven by positive contributions from four of eight components: Percentage of Respondents Who Say They Find “Jobs Hard to Get”, Percentage of Firms With Positions Not Able to Fill Right Now, Job Openings, and Number of Employees Hired by the Temporary-Help Industry.

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.

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