WASHINGTON (Reuters) - The U.S. labor market recovery quickened a bit last month, according to a new Federal Reserve gauge that draws on 19 separate jobs-related measures to give a broad sense of the market’s health.
The labor market conditions index rose by 2.5 points last month after an increase of 2.0 in August, the Fed said on Monday.
The index, which has averaged gains of 4.1 points per month so far this year, reflects the acceleration in hiring and drop in the unemployment rate that the government reported on Friday. Non-farm employers added 248,000 workers to their payrolls in September, and the jobless rate hit a six-year low of 5.9 percent.
Among other indicators the Fed draws on to create the index are the labor force participation rate, average weekly hours and hourly earnings, and hiring and quit rates. The aim is to produce a single measure to gauge whether the nation’s labor market on the whole is improving or not.
In a Web posting in May introducing the new measure, Fed economists said the LMCI had risen an average of four points per month during expansions.
Fed Chair Janet Yellen highlighted the index in a speech at the U.S. central bank’s annual conference in Jackson Hole, Wyoming, in August. At the time, she said the index suggested the decline in the jobless rate over the past year overstated the improvement in overall labor market conditions.
The Fed is trying its best to determine how much slack remains in the labor market as it tries to decide when to raise benchmark overnight interest rates from near zero, where they have been held since December 2008.
The Fed plans to release the LMCI on a monthly business around 10 a.m. ET on the first business day following the government’s monthly report on employment.
Reporting by Timothy Ahmann; Editing by Andrea Ricci