The U.S. employment market seems to be heading for a slowdown, as indicated by a decline in the Employment Trends Index in August. The Conference Board, a private-research group, reported that the index fell to 113.02 from 114.71 in July, marking its lowest level in over a year. This downward trend has been consistent since March 2022.
Despite the decline, the index still hovers above long-term averages, offering some optimism. Senior economist Selcuk Eren from The Conference Board stated that job gains may continue in the coming months, but at a slower pace. Ultimately, job losses may become more prevalent.
Certain industries such as IT services and transportation and warehousing are already experiencing job cuts. The recent reading of the index in August suggests that this weakening trend could spread across the labor market.
The Employment Trends Index combines eight different indicators, with six of them demonstrating negative results in August. These include measurements of voluntary part-time work, reports of difficult job availability, and initial unemployment-insurance claims. When the index rises, employment is expected to increase as well. Conversely, changes in the index signal a potential shift in job numbers in the near future.
The declining employment index aligns with other reports indicating a cooldown in the labor market due to higher interest rates. The recent jobs report by the Labor Department revealed slower hiring and growing unemployment over the summer. However, despite these setbacks, most employers are still retaining their workers and even raising wages.