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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.

Labor Markets Register Nice Job Gains in June

Private-sector nonfarm payroll jobs rose by 202,000 in June, with 37,000 of upward revisions to the May level. We focus on a measure of private-sector payroll jobs that excludes the volatile construction and retailing sectors. That measure rose by 211,000, with 55,000 of upward revisions to May. Both measures are displayed in the accompanying chart.

As seen there, June growth was stronger than what we have been seeing for most of the previous nine months. So, while the "headline" gains announced today were not as strong as those of previous months, we judge the underlying details of this report to be the strongest since summer 2017.

On the other side of the ledger, hourly wage growth moderated to a 0.2% gain in June, and the unemployment rate ticked up to 4.0% from 3.8% in May. Within the household survey that generates the unemployment rate data, labor force participation picked up, while household employment growth slowed, thus the increase in unemployment.

So, today’s news contained something for everybody—better payroll job growth for those touting a stronger economy, but higher unemployment and contained wage growth for those thinking the Federal Reserve should slow its pace of rate hikes. Our own view has been that neither economic growth nor inflation were picking up the way market sentiment has been perceiving. Today’s job growth news was not supportive of our view on growth, but we would counter that previous months’ data were not as buoyant as consensus perception had alleged.

Meanwhile, again, our favored jobs measure excludes construction and retailing, because of their seasonal volatility. Both measures had jumped early in the year, and both moderated in June.

Finally, manufacturing is the one sector showing significant improvement in job growth in the last two years. The June data announced this morning continued that skein, with factory jobs up a nice 36,000, and factory production jobs up 27,000.

Monthly Job Growth
Monthly Job Growth
Source: Bureau of Labor Statistics. As of 30 Jun 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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