By the Numbers

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

Sign up to receive an email as pertinent data are released.

June's Jobs Data Provide an Interesting Offset to May's

We’re told there is an old Chinese curse “May you live in interesting times.” US jobs data have certainly been interesting the last 2 months, with the May data horrible and today’s June data terrific. Average together “horrible” and “terrific,” and you still get only tepid.

Private-sector payroll jobs were up 265,000 in June, following revised changes of -6,000 and +147,000 in May and April, respectively. Net out the effects of the telecommunications strike and the gains become +32,000 in May and +227,000 in June, averaging out to a tepid 130,000.

Meanwhile, the volatile construction and retailing sectors continue to retrace the outsized growth reported around the turn of the year. Between November and March, these sectors together averaged +80,000 jobs per month. Over the last 3 months, they have averaged only 3,000.

The upshot is that though headline jobs data appeared to have slowed only in the last 3 months, abstract from construction and retailing, and it is clear that the slowdown has been in place throughout 2016. As shown by the blue line in the accompanying chart, private-sector job growth net of construction and retailing broke slower starting in January 2016 and has continued thus. 

This less volatile measure showed a gain of 197,000 in June, tempered by a gain of only 45,000 in May. For the first 6 months of 2016, its average growth was 119,000 per month, compared with trend gains of 166,000 per month over 2011–15. The 121,000 average gain there for the last 2 months is right in line with this slower 2016-to-date trend.

This slowing has been focused in manufacturing and its adjuncts: mining, logistics, and professional services. All these sectors have shown weak job growth throughout 2016, whereas job growth in service sectors unrelated to manufacturing has held steady. And these trends remained intact within the June data, despite its “interesting” turn.

Our guess is that this leaves the Fed on hold. Again, job growth has been slow for quite some time, the factory sector remains weak, and today’s data do not meaningfully alter this picture. Meanwhile, the added concerns arising from the Brexit vote further stay the Fed’s hand.

Private-Sector Job Growth
Private-Sector Job Growth
Source: Bureau of Labor Statistics. As of 30 Jun 16

Michael Bazdarich

Product Specialist/Economist

Mike brings more than 40 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.

Sign up to receive an email as pertinent data are released.

© Western Asset Management Company 2017. This publication is the property of Western Asset Management Company and is intended for the sole use of its clients, consultants, and other intended recipients. It should not be forwarded to any other person. Contents herein should be treated as confidential and proprietary information. This material may not be reproduced or used in any form or medium without express written permission.
Past results are not indicative of future investment results. Investments are not guaranteed and you may lose money. This publication is for informational purposes only and reflects the current opinions of Western Asset Management. Information contained herein is believed to be accurate, but cannot be guaranteed. Opinions represented are not intended as an offer or solicitation with respect to the purchase or sale of any security and are subject to change without notice. Statements in this material should not be considered investment advice. Employees and/or clients of Western Asset Management may have a position in the securities mentioned. This publication has been prepared without taking into account your objectives, financial situation or needs. Before acting on this information, you should consider its appropriateness having regard to your objectives, financial situation or needs. It is your responsibility to be aware of and observe the applicable laws and regulations of your country of residence. Potential investors in emerging markets should be aware that investment in these markets can involve a higher degree of risk. Any forecast, projection or target is there to provide you with an indication only and is not guaranteed in any way.
Western Asset Management Company Distribuidora de Títulos e Valores Mobiliários Limitada is authorised and regulated by Comissão de Valores Mobiliários and Banco Central do Brasil. Western Asset Management Company Pty Ltd ABN 41 117 767 923 is the holder of the Australian Financial Services Licence 303160. Western Asset Management Company Pte. Ltd. Co. Reg. No. 200007692R is a holder of a Capital Markets Services Licence for fund management and regulated by the Monetary Authority of Singapore. Western Asset Management Company Ltd is a registered financial instruments dealer whose business is investment advisory or agency business, investment management, and Type II Financial Instruments Dealing business with the registration number KLFB (FID) No. 427, and members of JIAA (membership number 011-01319) and JITA. Western Asset Management Company Limited (“WAMCL”) is authorised and regulated by the Financial Conduct Authority (“FCA”). In the UK this communication is a financial promotion solely intended for professional clients as defined in the FCA Handbook and has been approved by WAMCL.