The Conference Board’s Employment Trends Index slipped in September after posting a gain in August. The index now stands at 110.77, down from 111.18 in August, and represents a 6.7 percent gain compared to a year ago. The Conference Board’s September figures are in contrast with the federal government’s announcement that the U.S. unemployment rate dropped to 3.7 percent, the lowest rate since December 1969.

“Despite this month’s decline—the result of just two components—the index remains on a solid upward trend, and has been growing rapidly in recent months,” says Gad Levanon, chief economist, North America, at The Conference Board. “The U.S. economy is very strong now. Demand for workers is likely to continue growing rapidly in the coming quarters, but with the unemployment rate now at 3.7 percent, recruiters have their work cut out for them. They will have to bring more people off the sidelines faster. In the meantime, businesses will have to squeeze more out of their current workers, either by increasing working hours or raising labor productivity. Labor market tightness varies across occupations and geographies. However, for the nation we expect the unemployment rate to go down to 3.5 percent or even lower in 2019. We also expect labor force participation and productivity to gradually increase, and wages to further accelerate.”

He adds, “In the past four quarters, average hourly earnings increased by 2.8 percent and accelerated to 3.1 percent in the past two quarters. The acceleration in wages is especially visible among blue collar occupations, where it is essentially back to pre-recession rates.

“The U.S. economy is growing rapidly now, and we expect this trend to continue in the coming quarters, meaning that the demand for workers should not slow down. In the past 12 months, the U.S. economy added over 2.5 million jobs. Will an economy at a 3.7 unemployment rate be able to add that many jobs in the next 12 months? That will be challenging. We expect employers to more rapidly do what they have been doing in recent quarters: automate, increase working hours and pull people back to the labor force, especially young men, whose labor force participation rate barely recovered yet.”

In determining its Employment Trends Index, the Conference Board aggregates eight labor market indicators that it has found are accurate within their own areas. It notes that aggregated individual indicators into a composite index filters out “noise” to show underlying trends more clearly. The September decrease stems from negative contributions from two of the eight components: the Ratio of Involuntarily Part-time to All Part-time Workers and the Percentage of Respondents Who Say They Find “Jobs Hard to Get.” Other indicators aggregated in the Index include Percentage of Firms With Positions Not Able to Fill Right Now, Industrial Production, Job Openings, Real Manufacturing and Trade Sales, Number of Employees Hired by the Temporary-Help Industry, and Initial Claims for Unemployment Insurance.