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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.


Job Growth Slows in December

Private-sector nonfarm payroll jobs rose by 139,000 in December, with a -10,000 revision to the previously estimated November level. For the jobs measure we focus on, private-sector jobs excluding construction and retailing, the gains totaled 78,000 with a -4,000 revision to November.

Both these gains are well below those registered for November—even after revisions—and somewhat below the average gains for all of 2019. Then again, we were coming off very strong gains in November, when, even allowing for the effects of the end of the GM strike and including today’s revisions, the gains were 203,000 for total private-sector jobs and 215,000 for our preferred measure.

As you can see from the accompanying chart, monthly job growth rates were quite erratic in 2019, with very strong gains regularly followed by soft ones, and vice versa. For all 12 months of 2019, total private-sector jobs rose by 1.947 million, or 162,000 per month. Our preferred measure rose by 1.797 million, or 150,000 per month. Both those average gains were below the averages for 2018, 215,000 per month and 189,000 per month for the total and "preferred" measures, respectively.

Keep in mind that these slowings from 2018 averages to 2019 averages are of about the same magnitude as the downward revisions to 2018 growth that the Bureau of Labor Statistics has announced will be incorporated into the 2018 data next month, when annual benchmark revisions are released. In other words, when those revisions are in place, it is likely that 2019 average job growth will be little different from that of 2018. So, any claims that job growth slowed markedly in 2019 are consistent with the current data, but will likely prove to be incorrect just a month from now.

You might be saying, "Well, won’t 2019 data also be revised, possibly downward just as much as 2018?" The answer is yes, possibly, but most probably not. First, the revisions to be announced next month will extend only through March 2019. Second, "companion" revisions to the personal income data, based on the same source data that will be used to revise the payroll jobs estimates, suggest that job growth will actually be revised up in the first half of 2019. We’ll discuss the details of these revisions in this space in one month.

For now, job growth ended 2019 on a soft note, but the overall performance for the year was reasonably good. Economic growth in total slowed enough in 2019 to get the Fed from tightening to easing mode, but not enough to engender any serious threats of actual weakness. And the brunt of the slowing in output growth occurred in manufacturing, with likely little effect on jobs and income and no ostensible damage to the consumer sector.

Monthly Job Growth
Monthly Job Growth
Source: Bureau of Labor Statistics. Adjusted for Verizon strike in 2016 and GM strike in 2019. As of 31 Dec 19

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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