Reporting Focus from the January 2006 Edition of the SGS Newsletter

Help-wanted advertising historically has been a reliable indicator of underlying business conditions and pending employment activity. Surveyed each month by the Conference Board, the index is based on the number of job offerings appearing in 51 (at present) newspapers around the country. The data are not seasonally adjusted and have been published from January 1951 on. Given the lack of seasonal adjustment, SGS has found the series most useful when smoothed using a three-month moving average and viewed in terms of year-to year change.
As seen in recent activity, the index hit a trough of 35 in the last recession, in May 2003, the lowest level then reported since September 1961. The index has been bottom bouncing in the interim, hitting 39 in November 2005 reporting.
SGS has used this measure as a reliable leading indicator of major changes in the direction of economic activity, but apparent recent reporting difficulties at the Conference Board raised issues of ongoing reliability of the traditional series, with monthly revisions swinging by ten percent of the total index value. Separately, where the traditional help-wanted advertising measure counts advertisements in newspapers, new measures of the growing on-line Internet help-wanted advertising also have been created. Accordingly, the nature and quality of the help-wanted advertising indicator has been reexamined and the new measures considered.
First, as to the traditional series’ reporting quality, the huge variations and revisions, seen in particular in the August 2005 index, were due to data gathering problems created by Hurricane Katrina. Such is according to the Conference Board. Since the data series appears largely to have stabilized, we have resumed using it as before. There is no viable alternative to the measure, despite some still irregular revisions to the series.
Second, as to the Internet indicators that attempt to measure the level of help-wanted advertising in the electronic medium, there are two indices that are gaining some following. The Monster Employment Index (www.monsterworldwide.com) was started in April 2004 with data gathered since October 2003. Its electronic surveying counts job postings at over 1,500 Web sites on a monthly basis.
The other Internet measure is the Conference Board’s Help-Wanted Online Data Series started in July 2005. The Conference Board measure surveys 1,200 Internet job boards and counts only those ads that are unduplicated, first-time postings.
The Internet clearly is a major and growing market for help-wanted advertising and job searches. Accordingly, the electronic ads likely have had a hand in reducing print ads counted in the traditional help-wanted index. Still, there are major issues tied to the lack of history behind the new series that only can be cured by the passage of time. Since neither the Monster nor Conference Board series is seasonally adjusted, year-to-year growth will be the primary method of assessing the results, and the Conference Board numbers have not been around long enough to generate the first annual growth measure.
Compared on a monthly basis, there seems to be little relationship between the two indicators, so far. For example, the Conference Board measure showed a monthly decline in November of 9.2%, where the Monster measure gained 4.2%.
The Monster measure has been around long enough, however, to start generating year-to-year change rates, which seem to be averaging around twenty-seven percent annual growth. One has to wonder how much that reflects growth in the use of the Internet medium and the medium itself, versus consistent ad volume. The annual growth rate did dip in September at the time of Katrina, but otherwise has remained stable near the twenty-seven percent level.
SGS will continue following and assessing the new series, but they are too new to be generating meaningful indications of employment activity. The older help-wanted series still is the primary indicator of such activity, despite any weaknesses and likely will remain so for another year or two.