By the Numbers

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

Sign up to receive email updates as new reports are released.

Numbers by the by...December Jobs up Briskly

"Second fiddle’s a hard part I know, when they don’t even give you a bow." ~Tom Lehrer, "Whatever Became of Hubert?"

It’s tough to write a piece called By the Numbers when there are no numbers coming out, at least not from government agencies. Since the federal government partially shut down two weeks ago, Commerce Department agencies such as the Bureau of Economic Analysis and the Census Bureau have ceased disseminating economic data. For some reason, however, the Bureau of Labor Statistics within the Labor Department has not been affected by the shutdown, so we did get a jobs report this morning (and will get Consumer Price Index and Producer Price Index data later this month, even if the shutdown continues).

That (welcome) data showed private-sector payrolls up by 301,000 in December, on top of a whopping +42,000 revision to the November payroll level. Even our preferred jobs measure, private-sector jobs excluding construction and retailing, added 239,000 jobs in December, on top of a +22,000 revision to November, which compares favorably to a 164,000 per month trend for this series over most of the past five years.

For most of the past year, we have commented that job growth over 2017-18 was actually slower than what we had seen in 2014-15. With the past few months of better jobs data—and upward revisions—we can’t say that any longer.

As you can see in the chart, even with the recent ups and downs in job growth, the broad thrust of the jobs data in 2018 looks better than what we saw in 2016-17 and is comparable to the experience of 2014-15. Within the jobs data, factory job growth continued brisk, and the service sectors, which had languished through most of 2018, have come alive in recent months.

We should throw out the proviso that December data are notoriously volatile because of holiday effects. We abstract from construction and retailing because of their extremely seasonal nature, but the rest of the labor market shows similar—if milder—seasonal swings, which government adjustment procedures don’t always fully capture. And before seasonal adjustment, private-sector jobs excluding construction and retailing rose only 100,000.

Still, any anomalies in today’s data will be ironed out in the next month or two. For now, it is the case that today’s job report was as strong as we have seen in a while, with that strength spread across virtually every sector of the economy.

Our forecast has been for slower growth this year, but no recession. Market sentiment seems to have swung wildly in the past two months, from much more buoyant than ours to much more pessimistic. Today’s data should pull that sentiment back toward the upside.

Monthly Job Growth
Monthly Job Growth

Source: Bureau of Labor Statistics. As of 31 Dec 18

Michael Bazdarich

Product Specialist/Economist

Mike brings more than 42 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 email updates as new reports are released.

© Western Asset Management Company, LLC 2019. This publication is the property of Western Asset 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. This publication is for informational purposes only and reflects the current opinions of Western Asset. 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 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.
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 Business Operator and regulated by the Financial Services Agency of Japan. Western Asset Management Company Limited is authorised and regulated by the Financial Conduct Authority (“FCA”). This communication is intended for distribution to Professional Clients only if deemed to be a financial promotion in the UK and EEA countries as defined by the FCA or MiFID II rules.