Labor Market Conditions Index Rises

The August employment report proved mixed but not the labor market conditions index which rose 3 tenths to 2.1. This is a soft level compared to the mid-single digit trend of 2013 and 2014 but is still the highest reading of the year, since December. Adding to the strength is a 7-tenths upward revision to July. Payroll growth in August was weak but not the unemployment rate which fell 2 tenths to a recovery best of 5.1 percent. This index is based on a broad set of 19 components and could be cited by the hawks as evidence of labor market improvement at next week's FOMC.

Recent History Of This Indicator:
The labor market conditions index is expected to inch 2 tenths higher to 1.3 in August. Outside of the unemployment rate and unemployment claims, data on the jobs market have been mostly soft including private payroll growth. This index, which is closely watched by the Fed, has not been signaling any urgency for liftoff.