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By the Numbers

Featuring brief segments of economic analysis from our senior economist Michael Bazdarich, PhD.

The economic analysis we previously featured in By the Numbers is now available on the Western Asset Blog. This page will no longer be updated.

August Job Growth Good but Revisions Negative

Headline private-sector jobs rose by 204,000 jobs in August, but that was off a July number revised down by 59,000 from what was announced a month ago. Our preferred jobs measure, private-sector excluding construction and retailing, rose by 187,000 in August, with a 28,000 downward revision to July’s previously reported level.

As the chart indicates, our preferred measure has tended to grow by 170,000 per month over recent years, so the August gains were above average, but other months’ performances have not been as strong. Thus, over the last 12 months, including August, this measure has seen average growth of 164,000, less than the average of preceding years.

As is also clear from the chart, there has been no detectable acceleration in job growth—headline or preferred—in the last year plus. One can debate whether or not we are at full employment, but accelerating economic growth requires accelerating job growth, and we have not seen that. So, strong or not, labor market data are not consistent with a thesis that the economic growth has improved since 2017.

Our preferred jobs measure excludes construction and retailing—not because they don’t matter, but because they are especially volatile in the short-term. In August, retailing declined slightly (-6,000, with -25,000 of revisions to July), while construction rose nicely (+23,000, with -6,000 of revisions). Over the longer-term, neither of these sectors has been an impetus nor drag on overall job growth, with both construction and retailing job growth generally steady for the last 18 months, at average rates of 19,000 and 1,000, respectively.

Wage growth was a bright spot in today’s report, with both all-worker and production worker average hourly wages showing nice gains, 0.4% and 0.3%, respectively. We think the production worker measure is more reliable, as it measures hourly wages for workers who actually are paid by the hour. It has risen 2.8% over the last 12 months, compared to 2.3% growth over the preceding 12 months.

Manufacturing jobs declined by 3,000 in August, with -31,000 of revisions to July. Manufacturing has been the bright spot for the US economy over the past two years, but today’s jobs news tags along with recent data on factory orders and output to possibly portray some slowing there, though it is premature to say so for sure.

Monthly Job Growth
Monthly Job Growth
Source: Bureau of Labor Statistics. As of 31 Aug 18

Michael Bazdarich

Product Specialist/Economist

Mike brings more than 43 years of experience to his position. "By the Numbers" will address economic data releases that are pertinent to a broad range of investors.

Prior to joining the Firm in 2005, Mike ran his own consulting firm, MB Economics. He earned his PhD in Economics at the University of Chicago.

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