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18 Oct. 2019 | Comments (0)
In the past year, The Conference Board started publishing the Help Wanted OnLine™ (HWOL) Index. During 2019, there has been a modest decline in the HWOL Index, indicating a slowdown in employment growth (Chart 1). This is another indication that the US economy and labor markets are decelerating.
The Conference Board Help Wanted OnLine® (HWOL) program measures the demand for labor in the United States using advertised online job vacancies. HWOL utilizes millions of individual job ads collected in real-time from thousands of online job boards to deliver a comprehensive and robust measure of labor demand.
Since job advertising is usually one of the first stages in the hiring process, it represents a key barometer of employers’ intentions to increase or decrease employment and the volume of goods produced or services provided. For this reason, measuring changes in advertised job postings can be a leading indicator of the labor market and overall economic activity.
Chart 1: Help Wanted OnLine® (HWOL) Index
Source: The Conference Board
In Chart 2, we show the 12-month growth rate in the HWOL Index and the Bureau of Labor Statistics non-farm employment level. Both are slowing down. While the HWOL Index is certainly weakening, it is nowhere near recession territory. The slowdown in recent months is about the same as the decline in 2015-2016, but much smaller than that of the Great Recession (2008-2009).
Chart 2: HWOL Index and Employment, 12-month growth rate
Source: The Conference Board, Bureau of Labor Statistics
The HWOL Index not only captures the current decline and that in 2015-2016, but it also leads the BLS employment measure in many cases. This is evidenced both in the drop during the 2008 recession and in the subsequent recovery. By February 2008, the HWOL had a negative growth rate compared to a year ago while employment, though declining, still had a positive growth rate. Similarly, during the recovery, the HWOL Index 12-month growth rate reached a positive level in February 2010 while employment growth remained negative.
The HWOL program first started as the Help-Wanted Advertising Index (HWI) in 1951, surveying monthly job ad counts in the classified sections of 51 newspapers in 51 cities. In 2005, the program moved from collecting printed job ads to collecting online job ads across the whole country, covering every state down to the city level. All online advertised vacancies posted directly on online job boards were targeted to create the HWOL universe of ads. Starting in 2018, HWOL began utilizing job ads collected directly from corporate sites, an important, reliable, and stable source of online job postings. From there, the Help Wanted OnLine™ (HWOL) Index was born.
The HWOL Index is built using a matched-pair panel of job sites from the HWOL database. The matched-pair methodology, in which job sites that either enter or exit the database are excluded, reduces a significant amount of non-economic volatility driven by individual job sites. In addition, focusing on the month-to-month growth of individual boards allows for the implementation of automatic outlier detection and smoothing. This greatly reduces the volatility driven by the most problematic sites each month. The resulting product is a smooth time series that is stripped of much of its non-economic noise.