The Conference Board Employment Trends Index™ (ETI) increased in August to 109.04 amid a downtrend in the index, and following July's downwardly revised 108.71. The Employment Trends Index is a leading composite index for payroll employment. When the Index increases, employment is likely to grow as well, and vice versa. Turning points in the Index indicate that a change in the trend of job gains or losses is about to occur in the coming months.

"The ETI rose in August, recording just its second monthly gain of 2024," said Mitchell Barnes, Economist at The Conference Board. "In the context of labor market data that is broadly softening, the improvement in the ETI is a positive indication that the pace of labor market slowdown remains sustainable ahead of September's Fed meeting, where we expect the interest rate cutting cycle to begin. Though some ETI components have weakened, August's gains puts the index back above the level it averaged in 2019—which at the time was considered a historically hot labor market."

Barnes added: "August's bounce in ETI coincided with last week's positive Employment Situation Report for August, which showed payrolls expanding at a healthy pace, unemployment ticking back down, and no signs are emerging that could accelerate the gradual slowing into deterioration." Supporting that story, initial claims for unemployment insurance (an ETI component) have fallen marginally in recent weeks and are not signaling sizable layoffs. Employment in temporary help services (an ETI component) was flat. Neither average weekly hours nor the share of involuntary part-time workers (another ETI component) collapsed. Meanwhile, metrics of household spending and production have remained strong.

That said, the overall steady decline of the ETI since peaking in 2022 is consistent with a collection of measures that point to increasing challenges for jobseekers not already employed. The share of respondents who report 'jobs are hard to get'—an ETI component from the Consumer Confidence Survey®—rose to 16.4% in August 2024, up from 11% to start the year. But again, this roughly aligns to the 2017-2019 pre-pandemic average. The downward trend, though is consistent with the Federal Reserve Beige Book released last week, which highlighted anecdotal evidence that some firms had shifted hiring 'to be primarily for replacement, rather than growth' even as 'layoffs remained rare.'

Labor shortages seem to be reemerging as a challenge, which we also see as a longer-term issue due to an aging workforce and specific talent shortfalls. The share of small firms that report jobs are 'not able to be filled right now' (an ETI component) rose to 40% in August and has fluctuated between 37-42% in 2024. Though this share of firms facing hiring difficulties has fallen from levels immediately following the pandemic, we expect it to remain at a more elevated level going forward, driven by long-run demographic and talent challenges.

August's increase in the Employment Trends Index was driven by positive contributions from four of its eight components: Real Manufacturing and Trade Sales, Job Openings, Initial Claims for Unemployment Insurance, and Industrial Production.

The Employment Trends Index aggregates eight leading indicators of employment, 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.

The eight leading indicators of employment aggregated into the Employment Trends Index include:

• Percentage of Respondents Who Say They Find "Jobs Hard to Get" (The Conference Board Consumer Confidence Survey^®)

• Initial Claims for Unemployment Insurance (U.S. Department of Labor)

• Percentage of Firms with Positions Not Able to Fill Right Now (© National Federation of Independent Business Research Foundation)

• Number of Employees Hired by the Temporary-Help Industry (U.S. Bureau of Labor Statistics)

• Ratio of Involuntarily Part-time to All Part-time Workers (BLS)

• Job Openings (BLS)*

• Industrial Production (Federal Reserve Board)*

• Real Manufacturing and Trade Sales (U.S. Bureau of Economic Analysis)**

*Statistical imputation for the recent month
**Statistical imputation for two most recent months

The Conference Board publishes the Employment Trends Index monthly, at 10 a.m. ET, on the Monday that follows each Friday release of the Bureau of Labor Statistics Employment Situation report. The technical notes to this series are available on The Conference Board website: http://www.conference-board.org/data/eti.cfm.