Retailer Daily

Employment Trends Index Slightly Dips

Continuing to follow the rise in U.S. unemployment figures, the Conference Board Employment Trends Index (ETI) decreased 0.6 percentage points between March and April 2009, falling from a score of 90.1 to 89.5. The April 2009 ETI is 22 percentage points lower than it was in April 2008, and the ETI has now declined for 21 straight months. Gad Levenson, senior economist for the Conference Board, said employment growth will not likely resume until Q4 2009, but some signs of hope are emerging. "In April, the Employment Trends Index recorded its smallest decline since June 2008, and three of its eight components actually showed an improvement," said Levenson. According to the Bureau of Labor Statistics, the U.S. unemployment rate rose 0.4 percentage points in April 2009, now standing at 8.9%. Job losses were spread across a wide variety of industries, including retail, which lost 47,000 jobs. Since April 2008, the unemployment rate has increased by 3.9 percentage points, or about 6 million people. The decline in the Employment Trends Index comes in the wake of a few recent positive economic developments, including a significant jump in the Consumer Confidence Index and slow but steady growth in the Restaurant Performance Index. On the negative side, in addition to the aforementioned increase in U.S unemployment, the U.S. GDP (gross domestic product) continued contracting in Q1 2009. The index improved in three of the eight aggregated labor market indicators: initial claims for unemployment insurance, part-time workers for economic reasons, and percentage of respondents who say they find jobs “hard to get.” A list of all eight indicators follows:

• Percentage of respondents who say they find "Jobs Hard to Get" (The Conference Board Consumer Confidence Survey)
• Initial claims for unemployment insurance (U.S. Department of Labor)
• Percentage of firms with positions not able to fill right now (National Federation of Independent Business)
• Number of employees hired by the temporary-help industry (U.S. Bureau of Labor Statistics)
• Part-time workers for economic reasons (BLS)
• Job openings (BLS)
• Industrial production (Federal Reserve Board)
• Real manufacturing and trade sales (U.S. Bureau of Economic Analysis)

The aggregation of these eight components into the Employment Trends Index (ETI) is constructed so that all components are equally weighted and volatility adjusted so that no single component can dominate the index. The volatility adjustment is done by calculating standardization factors determined by the standard deviation of the monthly percent change in each component. The period used for calculating the standardization factors begins in 1973 and ends at 2007. The standardization factors are then used to construct the index from 1973 to 2008. According to the Conference Board, the ETI typically leads unemployment figures by two months.