US Employment Trends Index climbs to 108.53, second straight monthly gain

The Conference Board's Employment Trends Index climbed to 108.53 in August from an upwardly revised 107.76 in July, a second straight monthly gain pointing to sustained job growth as the Federal Reserve weighs its next policy move.

"The ETI increased for a second consecutive month in August and is now up 2.0 percent from its level one year ago," said Conrad Qi, Economic Data Scientist Associate at The Conference Board. "Although they were mixed in August on a month-over-month basis, all eight components of the ETI delivered positive average contributions over the past six months. This suggests support for continued job growth after nonfarm payrolls grew by 162,000 in August."

The index's gains were broad-based. The ratio of involuntarily part-time workers to all part-time workers fell to 16.2 percent from 17.4 percent in July, while the share of consumers reporting jobs are hard to get dropped to 19.5 percent from a revised 21.7 percent. Temporary-help services employment added 6,800 positions, and industrial production and real manufacturing and trade sales each rose an estimated 0.1 percent.

Initial claims for unemployment insurance made the largest negative contribution in August, though claims remained below their June level. Job openings edged down 26,000 to 7.24 million, and the share of small firms with unfilled positions slipped to 35 percent from 36 percent but remained elevated by historical standards.

The composite gauge, which aggregates eight labor market indicators drawn from the Bureau of Labor Statistics, Census Bureau, and state unemployment agencies, serves as a leading indicator for payroll employment. Its trajectory carries weight for the Federal Reserve's rate path: with nonfarm payrolls growing 162,000 in August and the unemployment rate steady at 4.1 percent, a labor market that continues to add jobs reduces the urgency for aggressive easing at upcoming Federal Open Market Committee meetings.

Qi attributed the largest positive contributions to declines in the involuntary part-time ratio and the share of consumers reporting jobs are hard to get. The involuntary part-time ratio fell to 16.2 percent from 17.4 percent, indicating less underemployment, while the consumer confidence measure improved to 19.5 percent from a revised 21.7 percent, reflecting better perceptions of current job availability.

The ETI's second consecutive monthly increase follows a period of labor market cooling that had raised questions about the pace of hiring. The index is now up 2.0 percent year-over-year, suggesting the employment picture has stabilized rather than deteriorated. The improvement has been broad-based rather than concentrated in a single sector, with all eight components delivering positive average contributions over the past six months.

The August data arrive as markets assess the Federal Reserve's policy trajectory. The steady pace of job creation gives policymakers room to proceed cautiously with rate adjustments. The next Federal Open Market Committee meeting will provide the clearest signal on whether the labor market's resilience shifts the balance of risks for monetary policy.

This article is for informational purposes only and does not constitute investment advice.