There’s a new cool economic report: the Labour Market Conditions Index, or LMCI.
The latest LMCI, released on Monday, increased to 2.5 in September from 2 in August, but indicates that labour market conditions remain broadly stronger.
Here’s a chart of the latest LMCI:
The index was first “made famous” by Fed Chair Janet Yellen in her speech at Jackson Hole, when she said, “This broadly based metric supports the conclusion that the labour market has improved significantly over the past year, but it also suggests that the decline in the unemployment rate over this period somewhat overstates the improvement in overall labour market conditions.”
Recall that at Jackson Hole, Yellen spoke about the labour market puzzle of a steadily declining unemployment rate and strong payroll gains against the backdrop of declining labour force participation and flat wages.
At the time, Yellen said, “There is no simple recipe for appropriate policy in this context,” and Friday’s jobs report largely reaffirmed this outlook.
On Friday, the latest jobs report showed that nonfarm payrolls grew by 248,000, the unemployment rate fell to 5.9%, while wages were flat month-over-month and the labour force participation fell to its lowest level since 1978.
Here’s the full table of the components included in the LMCI.