Conference Board Says Easier Hiring Signals Upcoming Labor Market Weakness

The labor market remains resilient, though there were signs in May that employment may decrease in the coming months, The Conference Board said in a Monday (June 8) press release.

The potential change was signaled by The Conference Board Employment Trends Index (ETI), which declined from an upwardly revised 107.88 in April to 107.1 in May, according to the release.

“May’s payroll employment was strong, rising by 172,000 in the month. However, the ETI, a forward-looking measure for payrolls, ticked down slightly in May with five of eight components contributing negatively to the index, highlighting potential downside risks to the labor market,” Jannik Schulz, economic research associate at The Conference Board, said in the release. “Nevertheless, the ETI is up 2.1 points compared to six months ago, indicating continued resilience in the labor market.”

The month’s decline in the ETI was driven primarily by a decrease in the share of small firms reporting that jobs are “not able to be filled right now.” That share dropped from 34% in April to 29% in May, per the release.

The four other components contributing to the decline were a jump in job openings that was idiosyncratic and not expected to continue, an increase in initial claims for unemployment, a slight change in real manufacturing and trade sales, and a similarly small change in industrial production.

The impact of these moves was partially offset by positive contributions from three other components of the ETI, including a fall in the share of involuntary part-time workers, a decline in the share of consumers who reported “jobs are hard to get,” and a rise in employment in the temporary help services industry.

Challenger, Gray and Christmas reported Thursday (June 4) that May saw the greatest number of layoffs since May 2020, which was the height of the COVID-19 pandemic.

According to that report, U.S. companies announced 97,006 job cuts in May. The tech industry led the way with 38,242 job cuts, an almost two-year high, with many employers citing the impact of artificial intelligence.

The University of Michigan’s Surveys of Consumers found that consumer sentiment about current economic conditions worsened by 12.8% between April and May.