Decelerating Job Growth Expected for Remainder of 2022

Hiring trends are beginning a reversal in the United States, and according to a leading jobs index, a reduction in new job formation is expected for the rest of the year.

“While the Employment Trends Index rebounded in June, it remains below the index readings from March and April 2022,” said Frank Steemers, Senior Economist at The Conference Board. “Moreover, a range of other economic indicators beyond the Employment Trends Index point to an economy that is slowing. Usually, it takes a few months for hiring decisions to adjust to changes in economic activity. Therefore, we expect positive, but decelerating, job growth over the next months.”

The Conference Board Employment Trends Index™ (ETI) increased in June to 119.38, up from a downwardly revised 118.88 in May 2022.

Steemers added: “Currently, the labor market is still strong and labor shortages are severe. However, this picture could change towards the end of 2022 and early 2023. With inflation still elevated and the Fed expected to continue to raise interest rates rapidly, the risk of a short and mild recession is growing. In such a scenario, employers may reduce hiring—and possibly implement furloughs and layoffs, depending on the severity of a potential economic contraction. By early 2023, there could possibly be monthly job losses—and in that case, the unemployment rate would tick up.”

June’s increase in the Employment Trends Index was driven by positive contributions from four of eight components. From the largest positive contributor to the smallest, these were: Ratio of Involuntarily Part-time to All Part-time Workers, the Percentage of Respondents Who Say They Find “Jobs Hard to Get”, Job Openings, and the Number of Employees Hired by the Temporary-Help Industry.

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

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