skip navigation

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.


Payroll Jobs Up Nicely in January, Benchmark Revisions About as Expected

Total private-sector payroll jobs rose by 205,000 in January, while our preferred payroll measure, private-sector excluding construction and retailing, rose by 221,000. December now shows growth in these measures of 142,000 and 86,000, respectively, up from the respective 139,000 and 78,000 gains that were reported a month ago. Looking at the previous and revised gains for December is not quite accurate, however, because the U.S. Department of Labor also benchmark-revised its payroll data going back a number of years.

Some months ago, Labor had previewed that it would be revising its payroll data down through 2019 by a total of 500,000, or about 40,000 per month for 2018. That is, these revisions include new, more complete information for the months from March 2018 through March 2019—this period referred to as the benchmark period for this year. For months after March 2019, no new information as yet has been compiled, and these months’ data is mostly based on the same establishment surveys that drive the initial payroll readings. (More complete information comes from payroll tax returns, which all payroll establishments are required to submit, as opposed to the establishment survey which covers only about 30% of nonfarm payroll workers.)

Previous data had suggested a noticeable slowing in job growth from 2018 to 2019. However, with the previewed downward revisions to 2018 and with subsequent indications that 2019 was turning out better than the establishment survey data suggested, our guess was that once this morning’s revisions were in place, 2019 job growth would stack up to be little different from that of 2018.

Looking at the revised data in the accompanying chart, we think that is the case. Over the benchmark period, total private-sector jobs were revised down by -512,000, while our preferred measure saw a downward revision of -345,000. Over the subsequent nine months through December, growth in total payroll jobs was revised UP by +90,000, while that in our preferred measure was revised up by +83,000.

For all of 2019, total private-sector payroll job growth averaged 149,000 per month, compared to 189,000 per month over 2018. For our preferred measure, 2019 job growth averaged 150,000 per month, compared to 166,000 per month in 2018. On net, then, we saw some slowing in job growth last year, but not much, and certainly none that is visible comparing month-to-month changes in the accompanying chart.

So, 2019 looks better relative to 2018 than it did a month ago, and 2020 is off to a good start with the January gains reported today. As you can see from the differences between total private-sector payrolls and our preferred measure, there was a lot of volatility and a lot of revisions to the data for construction and retailing. That is the main reason we abstract from these sectors.

In other sectors, manufacturing jobs declined slightly, all of that occurring in motor vehicles, which is still reeling from the GM strike. Net of vehicles, factory jobs rose in January, and non-vehicle factory jobs showed a gain of 50,000 over 2019, a reading that belies the fears about a recently shrinking factory 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 Jan 20

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.

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

© Western Asset Management Company, LLC 2020. 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.