Economic indicators raise concerns for employment
According to data from The Conference Board Employment Trends Index, the job market’s future appears uncertain. While job gains may persist in the near term, indications of potential job losses are emerging.
Selcuk Eren, a senior economist at The Conference Board, highlighted the declining trend of the Employment Trends Index since March 2022. Despite the index still being relatively high, Eren cautioned that the momentum of job growth could slow and eventually turn into job losses.
Several industries are already witnessing job cuts, including information services, transportation, warehousing, and temporary employment. The number of temporary help service employees, a crucial early indicator for broader hiring trends, has steadily decreased since its peak in March 2022. Job openings, which reflect worker opportunities, are also dwindling.
In August, The Conference Board Employment Trends Index dropped to 113.02 from a revised 114.71 in July. Nevertheless, wage growth remains elevated compared to pre-pandemic levels, raising concerns about underlying consumer inflation. Eren suggested that the Federal Reserve might increase interest rates at least once before the end of 2023, potentially leading to job losses in early 2024 and higher unemployment rates.
The decline in the Employment Trends Index for August was attributed to negative contributions from six of its eight components. The “jobs hard to get” sentiment among respondents was the most significant negative contributor, followed by the ratio of involuntary part-time to all part-time workers, the percentage of firms struggling to fill positions, the number of temporary help industry hires, initial claims for unemployment insurance, and real manufacturing and trade sales.
The Employment Trends Index aggregates eight leading indicators of employment. An increase in the index generally corresponds to employment growth, while a decrease suggests the opposite trend.