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No Worries Over Employment?


The really bad employment report came out on Friday. The Conference Board issued its own Employment Trends Index (ETI) this morning. Their report was "positive" for December and 5 out of the last 6 months.

"Despite the disappointing job numbers for December, the improvement in the Employment Trends Index is signaling solid employment growth in the months ahead," said Gad Levanon, Director of Macroeconomic Research at the Conference Board.

December's increase was driven by increases in 6 of the 8 components of the ETI. From largest positive contributor smallest they are: 

  1. Number of Temporary Employees 
  2. Consumer Confidence Survey--People who say "Jobs are hard to find" 
  3. Job openings *  
  4. Industrial Production *  
  5. Real Manufacturing and Trade Sales *
  6. % of firms with positions unable to fill right now (stayed the same)

The 2 negative components are:

  1. Initial Claims for unemployment insurance 
  2. Ratio of involuntary part-time to all part time

Given that the ETI only increased by 3/100 of 1% it does not really represent much improvement at all. Given that the two top contributors to this increase in the ETI indicate that more people are being hired on a part time basis and that involuntary part time employment is increasing does not seem to me like a positive development indicating improvement in the job market. The next three positive contributors are all estimates based on previous months, not real numbers. The last "positive" component stayed the same as the previous month. The two negative components strike me as the two most important measures of health in the job market and they were both negative.

Mark Thornton is a Senior Fellow at the Mises Institute and the book review editor of the Quarterly Journal of Austrian Economics. He has authored seven books and is a frequent guest on national radio shows.

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