Employment Trends Index Drops 0.51% in May 2025 Due to Tariff Uncertainty

The Conference Board's Employment Trends Index (ETI) for May 2025 decreased from 108.00 to 107.49, marking a continued slowdown since the beginning of the year. This decline is attributed to the impact of tariffs, which have introduced uncertainty into the labor market. Despite this, the ETI remains above the average level observed between 2017 and 2019, suggesting that the overall labor market is still robust.

The Conference Board highlighted a persistent discrepancy between hard data and soft data. While tariffs may be affecting business and consumer confidence, the May employment data indicates that hiring activities are maintaining a balance in the labor market. However, there are signs that certain industries are beginning to feel the pressure from tariff changes, which could lead to further erosion in the coming months.

The ETI is a composite index designed to gauge the health of the labor market. It is based on eight labor market indicators, including the number of job openings, the unemployment rate, and the percentage of the labor force that is employed. The index provides a forward-looking perspective on the labor market, helping to identify trends and potential shifts in employment patterns.

The decline in the ETI reflects the broader economic impact of tariffs, which have been a contentious issue in recent years. Tariffs are designed to protect domestic industries by making imported goods more expensive, but they can also lead to higher prices for consumers and reduced economic activity. The current slowdown in the ETI suggests that these effects are beginning to be felt in the labor market, as businesses adjust to the new economic landscape.

Despite the challenges posed by tariffs, the labor market remains resilient. The ETI's continued position above the 2017-2019 average indicates that the overall employment situation is still strong. However, the Conference Board's warning about the erosion of certain industries highlights the need for vigilance and adaptability in the face of ongoing economic changes.

As the labor market continues to evolve, it will be important for policymakers and businesses to monitor the ETI and other key indicators closely. By staying informed about emerging trends and potential challenges, they can take proactive steps to support a healthy and dynamic labor market. The ETI's forward-looking perspective provides a valuable tool for navigating the complexities of the current economic environment and ensuring that the labor market remains a source of strength and opportunity for all.