Labor Shortages

Robust Labor Market Expected to See Slower Job Gains in the Months Ahead

The Conference Board Employment Trends Index™ (ETI) declined in November to 117.65, from a downwardly revised 118.74 in October 2022. 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 ETI decreased in November 2022 for the second consecutive month. While the Index remains at a high level, its downward trend signals slower job growth ahead,” said Frank Steemers, Senior Economist at The Conference Board. “The labor market is currently still robust. However, the fourth consecutive decline in the number of temporary help services jobs—a component of the ETI and an important leading indicator for hiring—is a warning sign that job growth may slow going into 2023.”

Steemers added: “The demand for workers is still resilient and wage growth continues to be elevated. With the number of employees quitting still high—and the labor supply still constrained—employers may continue to offer strong pay increases to their existing workers and new hires over the coming months. However, with the economy expected to slow further in 2023 amid the Federal Reserve’s rapid interest rate hikes, we expect the US labor market to cool and possibly even record some monthly job losses. That said, labor shortages are unlikely to disappear altogether, with the unemployment rate projected to rise from the current 3.7 percent to a still-low 4.5 percent in 2023. Employers may still need to manage recruitment and retention difficulties, as well as rising labor costs, into the new year and beyond.”

November’s decrease in the Employment Trends Index was driven by negative contributions from six of eight components including: Initial Claims for Unemployment, Percentage of Firms With Positions Not Able to Fill Right Now, Industrial Production, Number of Employees Hired by the Temporary-Help Industry, Ratio of Involuntarily Part-time to All Part-time Workers, 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.

About The Conference Board

The Conference Board is the member-driven think tank that delivers trusted insights for what’s ahead. Founded in 1916, we are a non-partisan, not-for-profit entity holding 501 (c) (3) tax-exempt status in the United States. www.conference-board.org.

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