Mixed signals on the health of the U.S. labor market persisted Monday (Sept. 9) as The Conference Board Employment Trends Index (ETI) showed reason for optimism after last week’s Bureau Of Labor Statistics report showed a disappointing jobs outlook.
As reported Monday, The Conference Board Index rose to 109.04 in August 2024, following a downwardly revised 108.71 in July. This increase is only the second gain recorded for the year, suggesting that employment growth could continue in the coming months, according to The Conference Board analysis.
“The ETI rose in August, recording just its second monthly gain of 2024,” said Mitchell Barnes, an 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.”
Although some components of the ETI have weakened, the index remains above its 2019 average, a period marked by a strong labor market. August’s rise in the ETI aligns with positive labor market data, including a healthy payroll expansion and a decrease in unemployment. Indicators such as initial claims for unemployment insurance have fallen slightly, signaling stability, while other factors like average weekly hours and temporary help services remained steady. Household spending and production also continue to support labor market health. Despite these positive signals, the ETI’s decline since its 2022 peak points to growing challenges for job seekers, with an increasing share of respondents reporting that jobs are harder to obtain.
The findings add to the mixed signals in several segments of the economy, including consumer spending and retail performance. In its report on Sept. 6, the Bureau of Labor Statistics showed U.S. firms created 142,000 nonfarm jobs in August, which was lower than the roughly 161,000 positions that were expected. The July data was revised downward, too, as the latest 89,000 tally was a drop from the 114,000 roles previously estimated.
The “mixed messages” put more pressure on the Federal Reserve to cut interest rates when it meets next week.
“The August jobs report isn’t as bad as feared, but it’s still pretty soft,” wrote analyst Adam Crisafulli of Vital Knowledge in a Friday research note. “This release alone more than justifies the Fed going 50 [basis points] on 9/18 (and the case becomes even stronger when other recent reports are considered, like JOLTs, the Beige Book, etc.), not because the economy is crashing but instead due to it being at a crucial inflection point, with the soft landing at risk of turning into something worse without policy support.”
According to The Conference Board analysis, longer-term labor challenges, including shortages due to an aging workforce and specific talent gaps, are expected to persist. In August, 40% of small businesses reported difficulties filling positions, a number that has fluctuated throughout 2024. While this figure has declined from pandemic highs, it is expected to remain elevated due to demographic trends. August’s ETI increase was driven by contributions from four of the index’s eight components, including Real Manufacturing and Trade Sales, Job Openings, Initial Claims for Unemployment Insurance, and Industrial Production.
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