Following an increase in April, The Conference Board Employment Trends Index™ (ETI) significantly increased in May. The index now stands at 107.35, up from 104.31 (a downward revision) in the previous month. The index is currently up 39.4% from a year ago.
The takeaway:
According to Gad Levanon, head of The Conference Board Labor Markets Institute,
“In the past three months, the Employment Trends Index grew much faster than any other three-month period in the history of the index prior to the pandemic. This marked acceleration suggests historically strong job growth in the coming months.”
May’s increase was driven by positive contributions from all eight indicators used to compile the index. From the largest positive contributor to the smallest, the indicators were: Initial Claims for Unemployment Insurance; Percentage of Respondents Who Say They Find “Jobs Hard to Get”; Industrial Production; Percentage of Firms With Positions Not Able to Fill Right Now; Job Openings; Real Manufacturing and Trade Sales; Number of Temporary Employees; and Ratio of Involuntarily Part-time to All Part-time Workers.
What it means:
The current data also reinforces the trend toward growing labor shortages. “Forty-eight percent of firms reported an inability to fill positions in May’s NFIB survey—an all-time record,” says Levanon. “The labor shortages are causing wage growth to surge. Average hourly earnings in the past two months rose by 7.4% (annual rate), which is two to three times the typical growth rate in recent decades. If the current rate of wage growth continues for several more months, it could significantly impact inflation and monetary policy. Toward the end of 2021, labor shortages are likely to ease as some of the labor supply constraints moderate.”
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