employment are most strongly related to the LMCI. The composite help-wanted index, the insured unemployment rate, the quit rate, and persons working part-time for economic reasons are also highly correlated with the index. In contrast, government employment, the participation rate, and average hourly earnings are relatively uncorrelated with the LMCI. Changes in labor market conditions over the past 35 years

Chart 1 plots the average monthly change in the LMCI since 1977.4 Except for the final bar, which covers the first quarter of 2014, each of the bars represents the average over a six-month period. Changes in the LMCI align well with business cycles as defined by the National Bureau of Economic Research (NBER). The LMCI generally declines during recessions (the grey shaded areas) and typically rises during expansions.Chart 1: Average Monthly Change in LMCI

Table 2 reports the cumulative and average monthly change in the LMCI during each of the NBER-defined contractions and expansions since 1980. Over that time period, the LMCI has fallen about an average of 20 points per month during a recession and risen about 4 points per month during an expansion. In terms of the average monthly changes, then, the labor market improvement seen in the current expansion has been roughly in line with its typical pace. That said, the cumulative increase in the index since July 2009 (290 index points) is still smaller in magnitude than the extraordinarily large decline during the Great Recession (over 350 points from January 2008 to June 2009).

Table 2: Change in LMCI during Contractions and Expansions