Markets were mildly disappointed by December US payroll numbers released on Friday, showing a monthly fall of 85,000, but the Conference Board's employment trends index (ETI) continues to signal a labour market recovery.
The ETI is designed to lead turning points in payrolls and has eight components: consumers' assessment of job availability, initial unemployment claims, small firm unfilled vacancies, temporary employment, involuntary part-time working, job openings, industrial production and business sales. It bottomed in June last year, edging higher into the autumn before rising strongly in November and December. All eight components contributed to last month's gain – more details here.
Historically, the index has led troughs in payroll employment by between one and four months – see chart. The June bottom was, therefore, consistent with a low in payrolls by October. They increased marginally in November before slipping back in December. The ETI suggests that last month's decline will be either revised away or more than offset by a rise in early 2010.