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.

September Payroll Jobs: Where Are the Anomalies?

Private-sector jobs were reported this morning as rising 121,000 in September, with a +34,000 revision to the August level. For our preferred measure, private-sector jobs excluding construction and retailing, the rise was 108,000, along with a +14,000 revision to August. The latter gains compare to trend growth rates of about 170,000 per month over 2013-16 for our preferred measure.

The pundits we’ve heard this morning are emphasizing the upward revisions to August and dismissing the soft September gains as hurricane-related. Fair enough. However, a month ago, August’s job gains were nice, but there were much bigger downward revisions to July than the upward revisions announced today for August. And we didn’t hear any mention of revisions a month ago, either.

As for the supposed hurricane effects, the Bureau of Labor Statistics’ (BLS) comments on the jobs data this morning stated that while Hurricane Florence did indeed occur "during the September reference period...response rates...were within normal ranges." In other words, no clear evidence of hurricane effects. Meanwhile, look at the September data in the chart.

September 2018 job growth, while relatively low, was not outside the range of monthly fluctuations seen over the past few years. In comparison, the hurricane effects in September 2017 were quite clear, as also marked in the chart, with jobs essentially unchanged in September 2017 from August and an October gain that made up for the extremely weak September print.

So, it is far from clear in the chart that there were noticeable hurricane effects. If there were, they would be offset with a much stronger October gain a month from now, and we can then adjust the story accordingly. In the meantime, we point out that market analysts have been quick to apply positive spin to these data, ignoring the downward revisions a month ago, instead fixating on upward revisions this month and asserting the existence of hurricane effects on the September 2018 data when BLS commentary and visual inspection fail to indicate such.

No, the economy is not faltering. However, as we’ve stated here before, with construction sectors stalling, service sectors slowing, and manufacturing growing nicely but steadily, we just don’t see the acceleration in economic activity that the bond bears assert is occurring.

Monthly Job Growth
Monthly Job Growth

Source: Bureau of Labor Statistics. As of 30 Sep 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.