A measure of job prospects in the U.S. rose in July following the biggest slump in more than a year, indicating the labor market in the world’s largest economy is gradually healing.
The Conference Board’s Employment Trends Index increased 0.4 percent to 108.1 from the prior month after falling 0.7 percent in June, the biggest drop since April 2011, the New York-based private research group said today. The measure was up 5.9 percent from July 2011.
The report follows Labor Department data last week that showed employers added more workers than forecast in July even as the unemployment rate increased to a five-month high. Faster hiring is needed to lift wage growth and spur consumer spending, which accounts for about 70 percent of the economy.
“Slow employment growth is likely to continue in the next few months,” Gad Levanon, director of macroeconomic research at the Conference Board, said today in a statement. “There is no reason to expect employers to rapidly expand their workforce in the current economic environment.”
The Employment Trends Index aggregates eight labor-market indicators to forecast short-term hiring trends. On average, it can signal a rebound in hiring as little as three months before the fact and can predict job declines six to nine months in advance, the Conference Board said.
Improvements in five of the index’s eight components contributed to the increase in the overall gauge in July. These included a drop in jobless claims, an increase in industrial production and gains in employment for temporary workers, the report showed.
Payrolls rose by 163,000 in July after a 64,000 gain in June, the Labor Department said on Aug. 3. The median estimate of economists in a Bloomberg survey called for a 100,000 advance. Private payrolls, which exclude government agencies, rose 172,000, also exceeding the median forecast.
The jobless rate climbed to 8.3 percent in July from 8.2 percent. Unemployment stuck above 8 percent since February 2009 is one reason why Federal Reserve policy makers last week said they are prepared to take new steps if needed to boost the economy.
Including the July gain, the U.S. has recovered 4 million of the 8.8 million jobs lost as a result of the 18-month recession that ended in June 2009.