The index is a leading composite index for US payroll employment. When it increases, employment is likely to grow as well, and vice versa. Turning points in the Index indicate that a change in the trend of job gains or losses is about to occur in the coming months.

“July’s decline in the ETI is consistent with the normalisation that is occurring across labour market metrics, including the ongoing moderation of payroll gains. The ETI remains above the pre-pandemic trend, but is steadily reverting toward 2019 and early-2020 levels. Thus, the signals of softening that have emerged so far remain well within historic ranges and do not portend broader deterioration,” said Mitchell Barnes, economist at US think tank, in a release.

June’s ETI decrease was driven by negative contributions from six of its eight components: ratio of involuntarily part-time to all part-time workers, industrial production, real manufacturing and trade sales, percentage of respondents who say they find ‘jobs hard to get’, number of employees hired by the temporary-help industry, and job openings.

“The labour market is clearly cooling from its torrid post-pandemic pace, yet the trend of labour hoarding continues, despite rising labour costs. Companies continue to face difficulties finding workers,” he noted.

“The share of small firms that report jobs are ‘not able to be filled right now’ (a component of the ETI) stood at 38 per cent in July, down from 42 per cent in May, but well above the July 2009-January 2020 average of 23 per cent. This share is expected to remain elevated due to an aging workforce, labour hoarding and talent shortages,” Barnes added.

The unemployment rate ticked up to 4.3 per cent in July from 4.1 per cent in June, its fourth consecutive monthly increase. However, temporary layoffs and labour market re-entrants drove a large share of the rise, indicating that the spike may not be as severe as the headline suggests.

Despite recent increases, joblessness remains low. The overall unemployment rate has not breached the natural rate of unemployment (4.4 per cent), while initial claims remain close to historical ranges for the summer period.

Jobseekers are not yet reporting softening conditions: The share of respondents who report ‘jobs are hard to get’ rose in July to 16 per cent from an upwardly revised 15.7 per cent in May. That’s up from 12.2 per cent in March, but still roughly half the July 2009-January 2020 average of 30.1 per cent—a sign that options remain for jobseekers seeking employment.

On the other hand, the ratio of involuntary part-time workers relative to all part-time workers (an ETI component) ticked up to 17.2 per cent in July from 15.9 per cent in June.

Fibre2Fashion News Desk (DS)