U.S. Jobs Growth Set to Cool, Key Indicator Suggests

May 8, 2024

The U.S. labor market may begin to cool in the second half of the year as a key gauge of employment trends points to slowing job growth.

The Conference Board’s monthly employment trends index fell to 111.25 in April, down from a downwardly revised reading of 112.6 in March. Economists at the private research group said that the reading suggests that the labor market is beginning to show signs of cooling following a period of robust growth since the pandemic.

However, the group notes that substantial job losses are unlikely to occur in coming months, as employers are still facing labor shortages. 

The reading comes hot on the heels of April’s jobs report, which showed the U.S. added 175,000 jobs during the month, well short of expectations and slower than the month prior. April also saw the unemployment rate tick up to 3.9% from 3.8% the month prior.

The Conference Board’s employment trends index is a composite index that aggregates eight indicators, such as unemployment claims, job openings, and the number of temporary workers being employed. As a leading indicator, the index seeks to identify changing trends before they manifest in the economy, as opposed to lagging indicators, such as the Labor Department’s jobs reports, which look back in time to assess economic data. The employment trend index has a strong track record. When the index increases, employment is likely to increase as well, while turning points in the index suggest a change in the number of jobs is likely to occur in the short term.

The index has been on a downward trajectory since March of 2022, but the index remains elevated by historical standards. The current reading suggests a slowdown in growth on the horizon, but not an outright contraction.

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