Job growth may temporary slow amid Omicron wave
The Conference Board Employment Trends Index (ETI) increased in December. The index now stands at 116.63, up from 115.64 in November (an upward revision).
“The Employment Trends Index increased again in December. And based on the latest readings of the index’s components, job growth is likely to be strong in 2022,” said Gad Levanon, Head of The Conference Board Labor Markets Institute. “Nevertheless, in the very short term, job growth may be tepid as the fallout from Omicron continues.”
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Levanon added that “hiring in in-person services industries will be most impacted by Omicron through lower consumer spending, leading to less hiring. Such industries include restaurants, hotels, personal care, entertainment, and passenger transportation. In addition, an increasing number of sick or quarantined employees will force businesses to operate at lower capacity and dampen overall economic activity. Office environments will need to remain virtual or at least hybrid for the foreseeable future. Labor shortages continue to be severe and will likely remain so going forward. High wage pressures will continue to feed into price inflation. Service employers will need to automate quickly to make up for the labor shortfall.”
December’s increase in the Employment Trends Index was driven by positive contributions from six of eight components. From the largest positive contributor to the smallest, these were: Initial Claims for Unemployment Insurance; Ratio of Involuntarily Part-time to All Part-time Workers; Job Openings; Industrial Production; Real Manufacturing and Trade Sales; and the Percentage of Firms With Positions Not Able to Fill Right Now. The two components that made negative contributions in December were the Number of Employees Hired by the Temporary-Help Industry and the Percentage of Respondents Who Say They Find “Jobs Hard to Get”.
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The Employment Trends Index is a leading composite index for employment. When the index increases, employment is likely to increase as well, and vice versa. Turning points in the index indicate that a turning point in the number of jobs is about to occur in the coming months. 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)**
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