Employment Trends Index Confirms Strong Job Market

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The Conference Board may be best known for its consumer confidence readings, but the group also issues its Employment Trends Index. After a better snapback recovery in payrolls than the markets initially wanted to credit the U.S. economy for last Friday, the Employment Trends index confirms a solid recovery in October and higher revisions for September.

The index rose to 135.57 in October, and September’s level was revised to 132.86 from the 132.74 preliminary reading. The change represents a 5.4% gain in the index versus a year ago.

While the U.S. Department of Labor measures unemployment, payrolls, average hourly earnings, the workweek and other measures, the Conference Board’s Employment Trends Index measures eight labor-market indicators taken from its own data, the U.S. Department of Labor, the Bureau of Labor Statistics, the Federal Reserve, the Bureau of Economic Analysis and the National Federation of Independent Business Research Foundation.

The Conference Board said that October’s increase in employment trends showed gains in all eight index components.

As a reminder, last week’s report garnered a mixed reception. While unemployment was lower, the payrolls gains were lower than economists had projected, if you did not factor in the higher payrolls adjustments for September and August. The decrease in the hourly pay measured by the Labor¬†Department also surprised some economists, but the one-cent rise on a month over month reading was actually up 2.6% from October of 2016.

The Conference Board’s October report said:

The bounce back in the Employment Trends Index in October was one of the largest monthly increases ever, and comes after two declines because of the hurricanes. As expected, the ETI picked up and continued its strong upward trend, suggesting that employment growth will remain solid in the coming months.

All in all, this report is not a market-moving one. It is still useful in aggregating the overall employment picture. If all eight components showed gains, maybe it lends more credibility to last Friday’s payrolls and employment report being better than it may have sounded.