February Sees Minor Increase in Employment Trends Index, Indicating Mixed Job Market Signals

Employment Trends Index Shows Resilience in February

In a recent report by The Conference Board, the Employment Trends Index™ (ETI) recorded a small uptick in February, rising to 105.37 from a revised figure of 105.18 in January. This composite index is widely recognized as a leading indicator of future payroll employment trends, suggesting that an increase might be indicative of improving job conditions down the line.

Economist Mitchell Barnes commented on the ETI's resilience in light of a disappointing jobs report for February, which noted a decline of 92,000 jobs in the Bureau of Labor Statistics payrolls. He attributed this decrease to temporary factors, such as adverse weather and labor strikes. Despite these challenges, the labor market appears to be maintaining a balance, largely due to a slower growth rate in the labor force.

Among the components impacting the ETI, the share of workers involuntarily working part-time witnessed a decline to 16.2% in February. This marked the second consecutive month of significant improvement in this area, dropping from 19.4% in December. Furthermore, the percentage of small businesses reporting difficulty in filling open positions also showed encouraging signs, improving to 33%, having previously reached a post-pandemic low of 31% in January.

However, it is worth noting that six out of the eight components contributing to the ETI had a negative effect in February. This shift marks a contrast to the previous month, where seven components had shown positive contributions. Barnes elaborated that mixed signals might continue as businesses navigate through the current policy uncertainties impacting employment patterns.

Further complicating the picture, consumer sentiment regarding job availability worsened, with 20.6% stating that jobs are hard to obtain—the highest percentage recorded since early 2021. Additionally, initial unemployment insurance claims rose in February after a steady decline which had persisted since September. Employment within the temporary help services sector also fell, following gains in two of the past three months, while indicators of industrial production and real manufacturing and trade sales showed signs of slowing as well.

The increase seen in the Employment Trends Index can primarily be attributed to two key components: the ratio of involuntary part-time workers and the percentage of firms unable to fill positions. Conversely, the negative contributions arose from factors including job openings, claims for unemployment insurance, and declining employment in the temporary-help sector, alongside poor performance in industrial production and trade sales.

Here are the eight leading indicators aggregated into the Employment Trends Index:

- Percentage of Respondents Who Say They Find 'Jobs Hard to Get' (based on The Conference Board Consumer Confidence Survey®)
- Initial Claims for Unemployment Insurance (data from the U.S. Department of Labor)
- Percentage of Firms with Positions Not Able to Fill Right Now (research from the National Federation of Independent Business)
- Number of Employees Hired by the Temporary-Help Industry (data from the U.S. Bureau of Labor Statistics)
- Ratio of Involuntarily Part-time Workers to All Part-time Workers (BLS data)
- Job Openings (BLS data)
- Industrial Production (data from the Federal Reserve Board)
- Real Manufacturing and Trade Sales (data extracted from the U.S. Bureau of Economic Analysis)

The publication of the Employment Trends Index occurs monthly, one week after the release of the Bureau of Labor Statistics’ Employment Situation report, each time helping stakeholders gauge upcoming shifts in employment trends. The Conference Board is a respected, non-profit membership organization dedicated to delivering insights that inform and prepare analysts and policymakers alike for future developments in the economy and labor market. More details on this index can be accessed directly through the Conference Board’s official website here.