January 2025 Employment Trends Index Sees Slight Decline, Reflecting Labor Market Stability

Decline in Employment Trends Index: January 2025 Report

The Conference Board's Employment Trends Index™ (ETI) has reported a decrease in January, with the index dropping to 108.35 from a downwardly adjusted 109.23 in December. As a leading composite indicator of payroll employment, a rise in the ETI typically signals growth in employment, while a decline may suggest upcoming challenges in job creation. This shift marks the first downturn after three consecutive months of growth.

Mitchell Barnes, an economist with The Conference Board, commented on the recent data, noting that the dip in the index comes after a period of stabilization. He indicated that the employment trend had largely plateaued since late summer, reflecting signs of a cooling labor market while remaining resilient overall. The data suggests that while January showed a slight setback, the employment landscape is not deteriorating significantly.

One key observation from the ETI is the increase in consumer sentiment regarding job availability. The percentage of respondents stating that jobs are hard to get rose from 14.9% in December to 16.8% in January, returning to levels seen in August of the previous year. Small businesses reported stable figures, with no significant changes in the number of unfilled positions – a signal that while labor demand exists, challenges persist in matching job seekers with available roles.

Job openings have also remained consistent, without drastic fluctuations despite some earlier volatility in 2024. Factors contributing to January's decline included negative shifts in reports from real manufacturing, trade sales, and industrial production. These areas, previously showing positive movement, now align negatively with the ETI's findings and contribute to a clearer picture of economic activity.

Barnes also highlighted that while the labor market has adjusted away from the heightened pace of 2022, the metrics available through January indicate that the labor market resembles conditions before the pandemic. Unemployment insurance claims totaled 216,800 in January, which is a notable improvement, representing a decline of 10% from a peak in June 2024 and also lying below averages seen in 2019.

In addition to this, other labor market indicators such as involuntary part-time workers have shown slight increases, hinting at changes in workforce engagement. The temporary-help industry has seen some decline in employment figures; however, the previous months' gains contributed positively to the overall job market metrics.

Overall, the latest ETI data suggests that while January experienced a setback, the broader labor market maintains a degree of stability, characterized by high employment levels, real wage growth, and committed labor demand. This combination continues to underpin economic momentum even in the face of emerging challenges.

The changes in the Employment Trends Index are based on eight specific components that track various employment-related indicators, including consumer confidence regarding available jobs and employment patterns among small business owners. The comprehensive nature of the ETI allows for nuanced insights that help policymakers and businesses make informed decisions in this ever-evolving economic climate.

As the Conference Board looks ahead, it plans to continue releasing updates on the Employment Trends Index, giving businesses and stakeholders critical insight into the trajectory of the labor market as it adapts to ongoing economic changes.