Employment index signals slower U.S. payroll growth

CALIFORNIA, UNITED STATES — The Conference Board’s Employment Trends Index fell for the second consecutive month in June, declining to 106.69 from 106.90 in May — a signal that payroll growth is slowing as consumer pessimism about job availability climbs to its highest level since early 2021, Staffing Industry Analysts reports.

Leading indicators show hiring is cooling

Jannik Schulz, Economic Research Associate at The Conference Board, tied the index’s second consecutive decline to deteriorating conditions across multiple labor market indicators.

“The ETI declined a second consecutive month in June, suggesting slower payroll growth ahead,” Schulz said.

Three of the ETI’s eight components pulled the index lower: the share of consumers reporting jobs are hard to get, initial unemployment insurance claims, and real manufacturing and trade sales.

Five components contributed positively, including job openings, industrial production, and an increase of 47,800 in temporary-help employment through the first half of 2026. Five components expanding against three contracting is not a broken index — it is an index telling employers to plan for a softer second half.

Consumer pessimism is driving the weakness

“Consumers’ pessimistic hiring outlook fueled much of June’s weakness in the ETI,” Schulz said, pointing to the share of consumers who report jobs are hard to get as the primary drag on the leading index.

The share of consumers who say jobs are hard to get rose to 22.5% in June, its highest reading since January 2021. Initial unemployment insurance claims rose for the second consecutive month, reaching 222,000 — the largest monthly average recorded so far in 2026.

The share of small firms with positions they cannot fill jumped three percentage points to 32%, a sign that employer demand for workers persists even as consumers grow more pessimistic about finding jobs.

The ETI is registering a labor market caught between genuine employer demand and growing worker pessimism — and that tension typically resolves in favor of the pessimists.

BPO and outsourcing buyers use leading indicators like the ETI because they signal hiring shifts months before payroll data confirms them.

Two consecutive declines, combined with consumer pessimism at a five-year high and rising initial claims, signal that U.S. clients are entering a cost-pressure cycle — the environment that has historically driven outsourcing pipeline growth.

The ‘low hire, low fire’ labor market the Conference Board describes is precisely the condition under which companies turn to offshore staffing to manage headcount without expanding their permanent payroll.