The Conference Board Employment Trends Index (ETI) fell again in December, down to 116.31 from 117.14 in November (downward revision).
This marks the third consecutive month the index has decreased, suggesting that job growth will continue to moderate in the months ahead. “However, the ETI remains at a high level and job gains are currently still robust,” said Frank Steemers, Senior Economist at The Conference Board. “The ETI would need to further decline before it may signal that a turning point in employment is about to occur.”
Seven of the eight labor market indicators had a negative impact on the index in December:
- Initial Claims for Unemployment
- Percentage of Firms With Positions Not Able to Fill Right Now
- Ratio of Involuntarily Part-time to All Part-time Workers
- Number of Employees Hired by the Temporary-Help Industry
- Industrial Production
- Real Manufacturing and Trade Sales
- Job Openings
Steemers noted that the number of employees working in temporary help services has been dropping for five consecutive months, a trend that may soon carry over into other industries. In addition, wage growth appears to be slowing compared to last year, but it’s still growing well above its pre-pandemic rate.
“Looking ahead, we expect the Federal Reserve’s rapid interest rate hikes to have a more visible, negative impact on the economy and job growth as 2023 proceeds,” Steemers added. “By yearend, we forecast the unemployment rate to rise to about 4.5% and labor force participation to decline to 61.8% — from 3.5% and 62.3%, respectively, in December 2022.”
