Methodology : Connecticut Coincident and Leading Indicators

The coincident employment index is a composite indicator of four individual employment-related series:

• the total unemployment rate
• non-farm employment (employer survey)
• total employment (household survey), and
• the insured unemployment rate.

Statistics on insured unemployment in the United States are collected as a byproduct of unemployment insurance (UI) programs.  Workers who lose their jobs and are covered by these programs typically file claims which serve as notice that they are beginning a period of unemployment. Claimants who qualify for benefits are counted in the insured unemployment figures.

The leading employment index provides a forecast of the expected future performance of employment in the Connecticut economy with approximately a three to nine month lag. It is a composite of six individual largely employment-related series ...

• the average workweek of manufacturing production and construction workers
• the Hartford help-wanted advertising index
• short-duration (less than 15 weeks) unemployment rate
• initial claims for unemployment insurance
• total housing permits, and
• Moody’s BAA corporate bond yield.

... while non employment-sector variables, such as housing permits, closely relate to construction employment and the corporate bond yield and add important information about the movement in interest rates.

All data are seasonally adjusted and come from the Connecticut Labor Department, the Bureau of Labor Statistics, the Federal Reserve Bank of Boston, and the Board of Governors of the Federal Reserve System.

Professors Pami Dua and Stephen M. Miller, in cooperation with Anirvan Banerji at the Economic Cycle Research Institute developed the leading and coincident employment indexes. The Connecticut Center for Economic Analysis (CCEA) at UConn supports the indices with continuing research.

Website in Transition - Dec. 2007