The US Employment Trends Index for August dropped to 106.41, down from 107.55 the previous month. This information comes from The Conference Board.

Employment Trends Index Overview

Interest in employment trends has grown due to changes in non-farm payroll data. The index combines various data points that have already been released. While it is a lower-tier indicator, it is important in today’s job market. The decrease in the index may indicate changing conditions in employment. The August Employment Trends Index fell significantly to 106.41, compared to last month’s 107.55. This drop hints at a slowdown in the labor market. We view this seriously, as it suggests future job growth may weaken. This decline follows a period of volatility in job data. In July 2025, Non-Farm Payrolls exceeded expectations with an addition of 240,000 jobs. However, the latest report for August showed only 160,000 jobs added, falling short of predictions. The ongoing slowdown in the ETI indicates that the weaker August number likely reflects the broader trend.

Federal Reserve Impact

We have seen this kind of trend before. During the 2007-2008 period, the Employment Trends Index started to decline months before headline payroll numbers officially indicated a recession. This historical pattern suggests we should prepare for slower economic activity now, rather than waiting for confirmation from delayed data. For traders, this raises the likelihood that the Federal Reserve will adopt a more lenient approach. The Fed has kept rates steady at 5.50% for most of 2025, but futures markets now foresee a 60% chance of a rate cut in early 2026. It would be wise to consider options that benefit from falling interest rates, like long calls on 10-year Treasury note futures (ZN). A more accommodating Fed usually boosts equities, especially in growth sectors. We should explore call options on the Nasdaq 100 index (NDX) to capitalize on potential gains from lower borrowing costs. If the market expects a “soft landing” from the Fed, it could lead to lower implied volatility, making selling VIX futures an appealing strategy. This situation also has critical implications for the US dollar. As expectations for rate cuts rise, the dollar’s yield advantage over other currencies is likely to diminish. We recommend buying put options on the US Dollar Index (DXY) to prepare for this potential weakness. Create your live VT Markets account and start trading now.

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