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Understanding the Decline in the Employment Trends Index

In August 2025, the Conference Board's Employment Trends Index (ETI) decreased to 106.41 from 107.13 in July, marking its lowest point since early 2021. The ETI is a composite measure that indicates future trends in payroll employment. An ETI value of 100 serves as a benchmark, derived from data corresponding to the year 2016, which helps analysts gauge relative changes in employment dynamics over time.

Mitchell Barnes, an economist at the Conference Board, noted that the ETI had previously peaked around two or three years ago and had experienced a steady decline ever since. He attributed this downturn to the normalization of the labor market post-pandemic rather than outright economic weakness. However, he acknowledges that the degree of decrease among the index's various components is concerning.

One pivotal component of the ETI is the share of consumers who find 'jobs hard to get.' This percentage rose to 20% in August, an increase from 18.9% in July—the highest proportion observed since early 2021. Moreover, reports from small businesses about unfilled job positions declined slightly to 32% in August, down from 33% in July. These statistics suggest that while hiring challenges persist, the situation is evolving.

Additionally, significant job openings saw a reduction with JOLTS reporting a drop of 176,000 in openings for July, following a previous decline of 355,000 in June. This trend, along with a 9,800 reduction in employment in the temporary-help sector, signifies shifts in how businesses are navigating labor shortages.

Despite these alarming indicators, layoffs and unemployment figures remain relatively low, indicating that companies are cautiously managing their workforce amid ongoing uncertainty. As Barnes notes, current tariff pressures are anticipated to escalate, leading to increased inflation and reduced consumer spending. This situation could ultimately stifle activity and curtail future hiring.

The ETI components demonstrate persistent challenges: initial unemployment claims crept slightly up in August, nearing levels not seen since May. The share of involuntary part-time workers remained stable at about 17%, below a peak of 18% in February. Additionally, August’s industrial activity reported notable negative impacts on the ETI, reinforcing the view of a slowing economy.

Factors like industrial production dropped between June and July, while real manufacturing and trade sales grew only 3.1% year-over-year as of June—a significant downturn from a high of 4.6% in March. This deceleration is further substantiated by manufacturing survey data, with the Institute for Supply Chain Management indicating seven successive months of contraction in manufacturing employment through August.

For the first time since November 2024, six out of the eight ETI components were negative in both July and August. This raises concerns about a potential turning point, wherein business activity is resoundingly affected by diminishing business confidence.

The ETI relies on eight leading employment indicators to produce its composite index. Notable components include the percentage of respondents who find jobs hard to get, initial unemployment claims data, and the number of employees hired in the temporary-help industry. Positive contributions to the ETI came from job openings and the ratio of involuntary part-time workers to all part-time workers.

Conclusion

The Employment Trends Index is published on a monthly basis, following the Bureau of Labor Statistics Employment Situation report, with significant insights accessible on the Conference Board's official website. The current fluctuations within the ETI are a critical indicator for economists and businesses alike, reflecting the complexities of the labor market and the underlying economic conditions influencing employment trends. As we navigate through these challenging times, understanding the ETI can provide valuable foresight into the trends that shape employment opportunities in the near future.