“The Employment Trends Index increased in February, but it has mainly been moving sideways over the past year,” said Frank Steemers, Senior Economist at The Conference Board. The index’s steady high suggests strong job growth will continue in the months ahead, but the Federal Reserve may continue raising interest rates in an effort to reduce inflation. And those higher interest rates, Steemers said, will likely have a negative impact on job growth later this year.
“Signs of cooling are already visible in some industries. The recent steep decline in job openings in construction may foreshadow reduced hiring over the next months as higher interest rates reduce demand for new construction projects.” Meanwhile, industries like health care/social assistance and leisure/hospitality are still hiring rapidly.
Only four of the eight labor market indicators contributed positively to the index in February:
- Percentage of Respondents Who Say They Find “Jobs Hard to Get”
- Percentage of Firms With Positions Not Able to Fill Right Now
- Job Openings
- Number of Employees Hired by the Temporary-Help Industry
“Strong demand for workers is becoming more in balance with labor supply as participation rates have risen over the last months,” Steemers added. “Participation for those aged 25 to 54 is now back at its pre-pandemic rate of 83.1%. Nevertheless, labor shortages remain severe and are unlikely to disappear soon.”