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Job Growth Expected to Decelerate—but Remain Positive—in the Coming Months

The Conference Board Employment Trends Index™ (ETI) declined in October to 119.57, down from an upwardly revised 120.73 in September 2022. The Employment Trends Index is a leading composite index for employment. When the index increases, employment is likely to increase 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 October 2022 and has been flat since early 2022, but it remains at a high level and a clear turning point in the Index is not yet visible,” said Frank Steemers, Senior Economist at The Conference Board. “Therefore, job growth will likely continue over the next months, albeit at a slowing pace. Indeed, the labor market remains resilient with job gains still strong, but the Fed’s rapid monetary policy tightening is expected to have a more visibly negative impact on the pace of hiring by early 2023.”

Steemers added: “Until that happens, employers will have to deal with continued labor shortages. While there are signs these shortages have begun easing somewhat, hiring and retention difficulties are not over. A tight US labor market, understaffing, limited recovery in labor force participation, and an aging workforce all suggest US labor supply will remain a challenge for companies. As a result, employers may be more careful in laying off workers. Currently, we expect the US economy to enter recession around yearend 2022, with the unemployment rate to rise to around 4.5 percent in 2023—roughly one percentage point higher than today, but still quite low compared to past downturns.”

October’s decrease in the Employment Trends Index was driven by negative contributions from four of eight components. From the largest negative contributor to the smallest, these were: Percentage of Respondents Who Say They Find “Jobs Hard to Get”, Initial Claims for Unemployment Insurance, Real Manufacturing and Trade Sales, and Job Openings.

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 eight leading indicators of employment aggregated into the Employment Trends Index include:

  1. Percentage of Respondents Who Say They Find “Jobs Hard to Get” (The Conference Board Consumer Confidence Survey®)
  2. Initial Claims for Unemployment Insurance (U.S. Department of Labor)
  3. Percentage of Firms With Positions Not Able to Fill Right Now (© National Federation of Independent Business Research Foundation)
  4. Number of Employees Hired by the Temporary-Help Industry (U.S. Bureau of Labor Statistics)
  5. Ratio of Involuntarily Part-time to All Part-time Workers (BLS)
  6. Job Openings (BLS)*
  7. Industrial Production (Federal Reserve Board)*
  8. Real Manufacturing and Trade Sales (U.S. Bureau of Economic Analysis)**

*Statistical imputation for the recent month
**Statistical imputation for two most recent months