#USA #New York #Labor Market #Conference Board #Employment Trends

Decline in Employment Trends Index: February Report

In February 2025, the Employment Trends Index (ETI) published by The Conference Board fell to 108.56, marking a decrease from January’s upwardly revised figure of 109.45. This index serves as a composite measure of trends in payroll employment, with changes in the index often indicating forthcoming shifts in job growth or losses. The downward trend recorded in February is a primary concern as it points to potential challenges in the labor market.

Mitchell Barnes, an economist at The Conference Board, highlighted that this drop represents the lowest point since October of the previous year. He noted that increasing policy uncertainties have started to dampen both business and consumer confidence. The expectation of federal layoffs and funding disruptions loom, further casting a shadow over the job market in the months to come.

The index reflecting consumer sentiment showed a notable rise in the perception that jobs are harder to obtain; it increased by 1.8 percentage points in February. Additionally, small businesses reported their capacity to fill job openings has shrunk, rising from 35% to 38% in this regard—signifying the largest monthly spike in nearly a year. This trend suggests a decline in perceived job market strength, despite relatively stable economic activity such as real manufacturing and trade sales, along with industrial production figures.

February's report did not fully capture the impacts of recently announced layoffs in federal and private sectors, yet troubling trends from several ETI components indicated early-warning signs of faltering conditions. For instance, applications for unemployment insurance saw a 3.4% uptick, reaching 224,000. Moreover, the proportion of involuntary part-time workers escalated from 16.7% to 18%, marking the highest level since 2021. Employment in the temporary-help sector also experienced a setback, with cumulative temp job losses hitting 22,000 over both January and February.

Barnes emphasized that while the overarching job market remains robust, there are emerging risks of a slowdown in hiring. Given the current climate of uncertainty, there is concern that employers may adopt a more cautious stance, which could lead to marked weaknesses in labor market conditions over the coming months. The previous end-of-year strength from 2024 now faces real risks of diminishing.

The elements influencing February's decline in the ETI included negative contributions from five of its eight components, namely: 1. The ratio of involuntarily part-time to all part-time workers, 2. The percentage of respondents indicating jobs are hard to obtain, 3. Initial claims for unemployment insurance, 4. The number of temporary-help industry hires, and 5. The percentage of firms reporting unfilled job positions.

The ETI aggregates eight leading employment indicators, each offering valuable insights into their respective areas. When combined into the ETI, these indicators provide a clearer view of underlying trends by filtering out inconsistencies. The collaboration of key indicators into the index includes:

• - Respondents Reporting Jobs Are Hard to Get: From The Conference Board Consumer Confidence Survey.
• - Initial Claims for Unemployment Insurance: From the U.S. Department of Labor.
• - Firms with Open Jobs Not Filled: By the National Federation of Independent Business Research Foundation.
• - Temporary-Help Industry Hires: From the U.S. Bureau of Labor Statistics.
• - Involuntarily Part-Time Worker Ratio: By the Bureau of Labor Statistics.
• - Job Openings: Also from the Bureau of Labor Statistics.
• - Industrial Production: Data sourced from the Federal Reserve Board.
• - Real Manufacturing and Trade Sales: From the U.S. Bureau of Economic Analysis.

In conclusion, the Employment Trends Index serves as a vital tool for understanding employment dynamics in the current economic landscape. With its recent decline, the outlook suggests necessity for vigilance in employment policies and market responses moving forward. The Conference Board will continue to publish this index on a monthly basis, providing essential updates on labor market trends and expectations in alignment with federal employment reports.