Employment Trends Index Slightly Improves
Reversing its recent trend of roughly following worsening
unemployment figures from the
Bureau of Labor Statistics (BLS), the Conference Board
Employment Trends Index (ETI) [pdf] improved in May 2009. The ETI increased from a revised April 2009 figure of 89.7 to 89.9, its first improvement since February 2008.
Gad Levanon, Senior Economist at The Conference Board, said it is too early to declare that the ETI has bottomed, but there has been a real decline in job losses and the worst period of unemployment may be over. "However, as the economic recovery over the coming months is likely to be very slow, we still expect the unemployment rate to continue to increase to double digits by the end of this year and into 2010,” said Levanon.
According to the BLS, the U.S. unemployment rate reached 9.4% in May 2009, a 0.5 percentage point increase from the previous month. In good news for the retail vertical, retail trade employment fell by 18,000, compared to a loss of 47,000 retail trade jobs in April. Since the start of the current recession in December 2007, seven million people have lost their jobs and the unemployment rate has almost doubled from 4.9% to 9.4%.
Employment Trends Index
Despite the increase in BLS unemployment figures, several other recent economic indicators have been at least mildly positive. Consumers’
personal income grew in April 2009, although consumer spending decreased. In May, the Consumer Confidence Index
improved by 14.1 percentage points, and the April Restaurant Performance Index
hit 98.6, largely aided by impressively high future expectations of restaurant retailers.
On the negative side, U.S.
retail sales declined 0.4 percentage points in April 2009.
Of the eight aggregated labor market indicators that constitute the ETI, four improved in May: percentage of firms with positions not able to fill right now, percentage of respondents who say they find "jobs hard to get," real manufacturing and trade sales, and job openings. A list of all eight indicators follows:
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.
