U.S. Employment Continued Its Upward Trend In August
Last month, the Conference Board’s Employment Trends Index climbed to 110.88 building on growth registered in July, when the index rose to 109.58. The August result represents a 6.9 percent gain on the year-ago level and coincides with the federal government’s announcement that the U.S. labor market added 201,000 jobs in that month.
“The Employment Trends Index continues to accelerate, with this month’s year-over-year increase being the strongest since May 2012,” says Gad Levanon, chief economist, North America, at The Conference Board. “This supports our projections for strong economic growth in the coming year, suggesting that demand for labor is likely to remain strong. To meet this demand, employers must draw more people back into the labor force, especially in blue-collar occupations, where the labor market is increasingly tight.”
Levanon adds, “Still, the current employment growth is more than enough to continue tightening the labor market. We expect economic growth to remain strong in the coming year, leading to more of the same: solid employment growth that will continue to tighten the labor market and draw more people back into the labor force. Growing labor market tightness will increase recruiting difficulties, labor turnover and compensation. The 12-month growth in average hourly earnings accelerated to 2.9 percent, the highest in this expansion, but still below the pre-recession rates. Labor market tightness varies significantly across occupations and geographies. Supply constraints are more visible in blue-collar occupations, where we are observing faster wage growth. We also anticipate this to provide a further incentive to businesses to raise productivity.”
In determining its Employment Trends Index, the Conference Board aggregates eight labor market indicators that it has found are accurate within their own areas. It notes that aggregated individual indicators into a composite index filters out “noise” to show underlying trends more clearly. All eight of the indicators made positive contributions to the index in June. From the largest positive contributor to the smallest, they are: the Percentage of Respondents Who Say They Find “Jobs Hard to Get,” the Ratio of Involuntarily Part-time to All Part-time Workers, Initial Claims for Unemployment Insurance, Real Manufacturing and Trade Sales, The Percentage of Firms With Positions Not Able to Fill Right Now, Number of Employees Hired by the Temporary-Help Industry, Industrial Production, and Job Openings.