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More Positive Employment Trends, Quicker End to Fed Quantitative Easing

Jon C. Ogg

The Conference Board's Employment Trends Index rose in August to 113.54 from an upwardly revised 112.80 in July. While the number on the surface is small, it should stand out that the Employment Trends Index report for August is actually 4.5% higher than the report for August of 2012. The Conference Board also sees employment expanding moderately through the fall of this year.

The implication is that the Labor Department likely will see continued strength throughout the remainder of 2013. Unfortunately, this also implies that the end of quantitative easing, the $85 billion in monthly bond buying by the Federal Reserve, can come sooner rather than later.

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August’s improvement actually was driven by positive contributions from seven of the eight measured components. In short, employment gains seem to be almost universal. These were the ratio of involuntarily part-time to all part-time workers, consumer confidence survey percentage of respondents who say they find “jobs hard to get,” initial claims for unemployment insurance, real manufacturing and trade sales, industrial production, job openings and number of temporary employees.

Gad Levanon, Director of Macroeconomic Research at The Conference Board, said:

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The growth of the Employment Trends Index in recent months suggests that employment is likely to moderately expand through the fall. The rapid job growth in the first half of 2013 was faster than we had expected given weak economic activity and only moderate improvement in the ETI. The slowing down of employment in the past two months brings the six-month trend to a more sustainable rate.

Unfortunately, the current climate demands that economic reports remain positive, but not so positive that the Fed's bond buying would be forced to a much quicker end.


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