Employment Composition Signal

Employment composition signal: tracking shifts across key sectors and categories in the labour market.

As of 2026-01-24

Gemini Summary

Signal Summary:

  • The Employment Composition signal (1) indicates a NEUTRAL state for the U.S. labor market as of 2025-12-01, with the composite z-score at -0.62.
  • This reflects a stable period with neither significant tightness nor rising slack.
  • Conviction Band: High | Interpretation Confidence: High Confidence | Internal Conflict Flag: No.

Key Dynamics:

  • The neutral state is driven by a stable participation rate (62.4%), employment-population ratio (59.7%), and unemployment rate (4.4%) as of 2025-12-01 (1).
  • Three-month momentum for these key metrics shows largely stable conditions (participation -0.1, emp-pop 0.0, unemployment 0.0) (1).
  • No internal offsets or tensions are observed, supporting the neutral classification.
  • Conditional Invalidation: The signal would reverse if the composite Employment Composition z-score moves outside the -0.75 to +0.75 range, shifting the regime to HOT or COOL (1).

Scenario Balance:

  • Base Case dominant: Continued neutral labor market conditions, supported by current stability in participation, employment, and unemployment rates.
  • Most plausible upside risk and trigger: An increase in participation or employment-population ratio, or a decrease in unemployment, leading to a HOT regime (z-score > +0.75).
  • Most plausible downside risk and trigger: A decrease in participation or employment-population ratio, or an increase in unemployment, leading to a COOL regime (z-score < -0.75).

Time Horizon & Aggregation:

  • Time Horizon: Cyclical (months) – reflects monthly changes and 3-month momentum, typical for labor market cycles.
  • Aggregation Weight Hint: High – provides a robust and coherent view of labor market health, a critical macro input.

Macro Relevance:

  • This signal primarily informs the macro dimension of slack, indicating the degree of tightness or looseness in the labor market (1).
  • The current neutral state suggests a mid-cycle position where labor market dynamics are balanced.
  • It typically interacts with other macro signals by cross-validating insights on wage growth (2), overall inflation (3), and broad economic growth trends (4).

Data & References:

  • U.S. Bureau of Labor Statistics (BLS) Current Population Survey (CPS) data for participation rate, employment-population ratio, and unemployment rate, latest observation 2025-12-01.
  • The `Employment_Regime` (NEUTRAL) and `Employment_Composition_z` (-0.622590) are most influential for the current state (1).
  • The Wage Growth and Inflation Signal (2) and Federal Reserve Liquidity Composite Signal (5) would improve depth and reliability.

Employment Composition Signal Chart

Signal chart

Employment composition: distribution and momentum across labour market segments.

Employment Composition Signal Table▸
participation_rate emp_pop_ratio unemployment_rate Participation_vs_EmpRatio Labor_Slack_Index part_mom_3m empr_mom_3m unemp_mom_3m part_z empr_z unemp_z_neg Employment_Composition_z Employment_Composition_0_100 Employment_Composition_Smoothed Employment_Regime
date
2024-10-01 62.5 60.0 4.1 1.041667 36.875 -0.2 0.0 -0.1 0.000000 -0.103768 -0.539593 -0.149426 22.857143 -0.067972 NEUTRAL
2024-11-01 62.4 59.8 4.2 1.043478 36.192 -0.3 -0.2 0.0 -0.168623 -0.311303 -0.674491 -0.326869 22.857143 -0.197420 NEUTRAL
2024-12-01 62.5 59.9 4.1 1.043406 36.875 -0.2 -0.2 0.0 0.000000 -0.207536 -0.539593 -0.190933 22.857143 -0.194177 NEUTRAL
2025-01-01 62.6 60.1 4.0 1.041597 37.560 0.1 0.1 -0.1 0.084311 0.000000 -0.425994 -0.051474 22.857143 -0.122825 NEUTRAL
2025-02-01 62.5 59.9 4.2 1.043406 36.250 0.1 0.1 0.0 -0.084311 -0.269796 -0.709990 -0.283641 22.857143 -0.203233 NEUTRAL
2025-03-01 62.5 59.9 4.2 1.043406 36.250 0.0 0.0 0.1 -0.084311 -0.283996 -0.709990 -0.289321 22.857143 -0.246277 NEUTRAL
2025-04-01 62.6 60.0 4.2 1.043333 36.308 0.0 -0.1 0.2 0.000000 -0.179864 -0.709990 -0.213944 22.857143 -0.230110 NEUTRAL
2025-05-01 62.4 59.7 4.3 1.045226 35.568 -0.1 -0.2 0.1 -0.449661 -0.770847 -0.780989 -0.644401 22.857143 -0.437256 NEUTRAL
2025-06-01 62.3 59.7 4.1 1.043551 36.757 -0.2 -0.2 -0.1 -0.674491 -0.770847 -0.396759 -0.657487 22.857143 -0.547371 NEUTRAL
2025-07-01 62.2 59.6 4.3 1.043624 35.454 -0.4 -0.4 0.1 -0.899321 -0.963558 -0.674491 -0.880050 22.857143 -0.713711 COOL (slack rising)
2025-08-01 62.3 59.6 4.3 1.045302 35.511 -0.1 -0.1 0.0 -0.674491 -0.963558 -0.674491 -0.790118 22.857143 -0.751914 COOL (slack rising)
2025-09-01 62.5 59.7 4.4 1.046901 35.000 0.2 0.0 0.3 -0.224830 -0.770847 -0.843113 -0.566893 22.857143 -0.659404 NEUTRAL
2025-10-01 62.5 59.7 4.4 1.046901 35.000 0.3 0.1 0.1 -0.224830 -0.770847 -0.843113 -0.566893 22.857143 -0.613149 NEUTRAL
2025-11-01 62.5 59.6 4.5 1.048658 34.375 0.2 0.0 0.2 -0.224830 -0.963558 -0.927425 -0.660840 22.857143 -0.636994 NEUTRAL
2025-12-01 62.4 59.7 4.4 1.045226 34.944 -0.1 0.0 0.0 -0.490539 -0.770847 -0.590179 -0.622590 22.857143 -0.629792 NEUTRAL
Methodology: Employment Composition Signal