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CCH® HR MANAGEMENT - 6/23/08

Employment index suggests more softening to come in labor market

The Conference Board’s Employment Trends Index (ETI) fell in May, continuing a decline that began in July 2007 and suggesting more softening to come in the labor market. The index fell in May by 0.5 percent to 113.7 from 114.3 in April and is down six percent since July 2007.

“We forecast further softening in the labor market, a moderate rise in unemployment, and weaker wage growth over the next several quarters,” said Gad Levanon, senior economist at The Conference Board. “Employers will find it easier to recruit and hire, and will be looking at slower growth in compensation costs. Workers will find it harder to get a job, a raise or a bonus—all of which will further rein in consumer spending.”

“The Employment Trends Index peaked in summer 2007, leading the job losses that began in January 2008, and we don’t see signs of a turnaround yet,” Levanon added. “Over the last year, the index has fallen at rates consistent with those we saw in previous periods of employment decline such as 2001. That said, we don’t anticipate job losses on the scale of those in that last contraction, in good part because employers have kept their payrolls leaner.”

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