Leading Indicator Shows US Employment Poised to Rise

Signage for a job fair on 5th Avenue after the release of the jobs report in Manhattan, New York City, on Sept. 3, 2021. Andrew Kelly/Reuters

The Conference Board’s Employment Trends Index (ETI), a leading economic indicator, suggests an incoming rise in U.S. employment numbers over the coming months, according to a Jan. 13 statement from the nonprofit think tank.

The ETI, which forecasts shifts in employment, rose marginally to 109.70 in December 2024 from the previous month. An increase in the index value is an indication that employment numbers are likely to rise.

Data released by the U.S. Bureau of Labor Statistics (BLS) last week showed that the U.S. economy added 256,000 new jobs in December 2024. This was higher than the November 2024 figures and exceeded expectations. Employment rose in sectors such as health care, retail, and leisure and hospitality.

Mitchell Barnes, an economist at The Conference Board, said the ETI has now seen three consecutive months of gains and that the index closed at its highest level since June 2024. He suggested that unemployment concerns seem to have moderated as the labor market becomes more balanced.

For instance, in the first week of January, the 4-week moving average of initial jobless claims was at its lowest level since April. In addition, employment in the temporary-help sector has risen for the past two months.

“High employment and wage growth have continued to support strong consumer spending and we expect labor demand to remain stable,” Barnes said.

A strong labor market also affects interest rate cut expectations. The BLS’s employment data “provides clear backing for a no-change interest rate decision from the Federal Reserve later this month,” ING Bank said in a recent report, referring to the upcoming Federal Reserve meeting scheduled for Jan. 28–29.

“The risk of an extended pause has increased with the market no longer fully discounting a rate cut until September.”

ING said its previous forecast of three rate cuts this year “may be too aggressive.”

Job Cuts, Hiring

A recent report from executive coaching company Challenger, Gray & Christmas Inc. revealed that U.S.-based employers announced 761,358 job cuts last year.

This was 5.5 percent higher than in 2023 and is the highest annual number since the 2.3 million cuts announced in 2020 amid the COVID-19 pandemic. Excluding 2020, last year’s job cuts were the highest since 2009.

The tech sector announced the most cuts in 2024, followed by health care/products, automotive, services, and consumer products.

“Companies underwent extraordinary change in 2024 due to rapid technological advancement and shifting economic conditions,” Challenger, Gray & Christmas Senior Vice President Andrew Challenger said in a statement. “Most employers are anticipating additional uncertainty with the upcoming administration, which is leading to slower hiring and more layoffs in the short term from various sectors.”

The pace of hiring was also slower last year, with companies announcing plans to add in 769,953 workers, the report said.

This was down marginally by 1.3 percent from the previous year. The 2024 number was also the lowest annual total since 2015.

Challenger said the slow hiring pace was reflective of “ongoing uncertainty” about the condition of the economy and employers adopting a cautious approach towards expansion.

“While certain sectors are accelerating recruitment, others remain hesitant due to market volatility and the impact of the new administration,” Challenger said.

As for what is in store for this year, a survey from workforce solutions company ManpowerGroup found that U.S. employers are expecting a “moderate hiring climate” in the first quarter of 2025. The survey asked 6,000 U.S. employers about their hiring intentions.

Among the respondents, 46 percent said they plan to hire, 38 percent aim to keep work levels steady, 12 percent expect to let some staff members go, and 4 percent were unsure about their hiring plans.

Companies in the information technology sector had the most positive “net employment outlook,” followed by those in financials and real estate; industrials and materials; health care and life sciences; transport, logistics, and automotive; and consumer goods and services.