The December jobs report was truly awesome. Will we see strong growth in January? One hint comes from The Conference Board Employment Trends Index (ETI), which increased in December following a minor decline in November.
“The Employment Trends Index rose sharply in December, reversing the declines in recent months, suggesting that employment will continue to expand in the coming months,” said Gad Levanon, Chief Economist, North America, at The Conference Board.”
Levanon continued, “With gloom and doom views dominating the news in recent weeks, it is somewhat reassuring that leading indicators of employment are growing. While employment growth could slow down in 2019, it is still likely to expand fast enough to further tighten the labor market. All the main measures of wages are now rapidly accelerating, suggesting that more people from the sidelines will return to the labor force in 2019. The improving labor force participation rate in December led to an increase in the unemployment rate to 3.9 percent. The expansion in labor supply is allowing employers to more easily expand their workforce and meet demand for their goods and services.”
December’s increase was fueled by positive contributions from seven of the eight components.
From the largest positive contributor to the smallest, these were: the Percentage of Firms With Positions Not Able to Fill Right Now, 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, Industrial Production, Number of Employees Hired by the Temporary-Help Industry, and Real Manufacturing and Trade Sales.
The Employment Trends Index aggregates eight labor-market indicators, 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.