The Labor Market Conditions Index (LMCI) is a tool created by the Federal Reserve Board to assess changes in labor market conditions. It draws on 19 indicators, from broad measures like the unemployment rate to narrower indicators like surveys of business hiring plans. It aims to produce a single measure to gauge whether labor markets, on the whole, are improving or not. Haver Analytics presents only the change in the index, rather than its level. Because the common components of the trends are slow- moving in our specification, short-run changes in the index are informative about movements in overall labor market conditions.

The change in the LMCI dipped to 4.9 during January from 7.3 in December. The m/m fall reflected the lessened gain in nonfarm payrolls, the uptick in the unemployment rate and the stability of the insured unemployment rate offsetting improvement in other indicators such as the change in average hourly earnings and the rise in the labor force participation rate. Despite the latest decline, the index continued to suggest steady improvement in the labor market as it has trended sideways.