Economic Trends Index Rises, But S-L-O-W-L-Y

Aug 9, 2010
This article is part of a series called News & Trends.

Another sign of the weak U.S. recovery: The Conference Board’s Employment Trends Index, released this morning, added three-tenths of a point in July, and now stands at 97.0.

To put this into perspective, the ETI stood at 100 in 1996, shortly after the economy began its Internet-fueled meteoric rise. By 2000 it was past 120 on its way (but not quite reaching) 130.

Though the ETI is now 9.8 percent higher than it was a year ago, its growth has slowed significantly in the last three months. In May, the index was 96.1. In April it was 95.2  and in March it was 93.9. June’s index was 96.7.

“The growth rate of the Employment Trends Index slowed sharply in the past three months, suggesting that employment growth will remain too weak to keep up with the increase in the working-age population,” said Gad Levanon, associate director, Macroeconomic Research at The Conference Board. “The disappointing employment numbers may indicate that the low levels of household spending and confidence are making businesses more cautious when it comes to hiring.”

Though there are several indices of economic health and trends compiled by The Conference Board, its Economic Trends Index is unique in that it is a composite of multiple measures. Among other things, it takes into account initial unemployment claims filed, the number of temp workers hired as reported by the U.S. Bureau of Labor Statistics, the Federal Reserve’s Industrial Production Index, and the percentage reporting they find “Jobs Hard to Get” from The Conference Board’s own Consumer Confidence Survey.

According to The Conference Board, “The main benefit of looking at a composite index is that individual indicators sometimes show erratic movements from month to month that do not necessarily reflect underlying trends.”

The Economic Trends Index reinforces what the Bureau of Labor Statistics reported Friday: the unemployment rate was unchanged, while new, private sector jobs created in July was a mere 71,000, less than half what economists estimate is needed to keep pace with workforce growth.

This article is part of a series called News & Trends.
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