A Federal Reserve index showed that the U.S. labor market improved in September after slowing earlier in the year.
The Labor Market Conditions Index, derived from 19 indicators, rose to 2.5 last month from 2.0 in August, according to data released by the Fed. The index declined from 6.3 in May.
“We view today’s update of the LMCI as consistent with broad-based labor market improvement,” Jesse Hurwitz, an economist with Barclays Capital Inc in New York, wrote in a client note.
Some analysts cast doubt on the usefulness of the index as a gauge of labor-market health.
“Separately the variables have value, but pushed together as a Group of 19, there is nothing here to sink your teeth into,” Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York, wrote in a note to clients.
Fed Chair Janet Yellen, who cited the index in an Aug. 22 speech to the Fed’s annual symposium in Jackson Hole, Wyoming, has broadened her assessment of the labor market to better measure how much slack remains as unemployment declines. She has cited persistent slack as justification for the Fed’s pledge to keep interest rates near zero for a “considerable time” after it completes a bond-purchase program that’s set to end this month.
The index, which the Fed will publish monthly beginning today, is heavily weighted to the unemployment rate and private payrolls. It also includes the labor-force participation rate as well as data on wages, hiring and dismissals. The index is released on the first business day after the Labor Department issues its monthly jobs report.
The U.S. jobless rate fell to 5.9 percent in September from 6.1 percent the month before, Labor Department data showed last week.
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