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.

January Payrolls Show Good Headline Gains, Underlying Details Not so Much...Seasonals at Play

January 2017 payroll job gains showed headline increases that cheered the markets, with total jobs up 227,000 and private-sector jobs up by 237,000. Net of the volatile construction and retailing sectors, however, the "core" measure we track was up only 155,000, which is below the 169,000 average gain for this series over the last five years.

This core measure is not something we made up for this month's data. As regular readers of this column know, we have tracked this particular series month in and month out for years. We exclude retailing and construction not because they don’t matter, but because they typically display wild monthly swings reflecting seasonal anomalies in the retailing and construction industries. Such swings are especially prevalent around year-end, due to holiday season and winter weather issues, so our core measure is especially relevant for this month's data.

The chart tells the story. Underlying job gains have been below prior years' trends for most of 2016 and for four of the last five months of 2016; they continued below those trends in January.

But are mediocre job gains elsewhere being offset by a sudden surge in retailing and construction? Not quite. While retailing and construction saw nice gains in January, 46,000 and 36,000 respectively, those mini-spikes offset relatively soft performance in both series in previous months. Essentially, the "normal" hiring patterns for these sectors have shifted, with less hiring over October–December offset by fewer layoffs in January. (Before seasonal adjustment, construction lost 241,000 jobs and retailing lost 546,000 jobs.) As the government's seasonal adjustment patterns are geared toward past years' developments, these changes show up in the seasonally adjusted data as weakness in October–December and sudden strength in January. On an ongoing basis, both sectors are showing generally steady trends, actually with a bit of slowing in construction sector job growth on average over the last 10 months.

So, yes, the extraneous details of the report were disappointing, with workweeks flat and hourly wages soft. But even apart from that, the job gains for January were not really as buoyant as the media hype would suggest.

Private-Sector Job Growth
Private-Sector Job Growth
Source: Bureau of Labor Statistics. As of 31 Jan 17

Michael Bazdarich

Product Specialist/Economist

Mike brings more than 45 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 2022. 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 authorized and regulated by Comissão de Valores Mobiliários and Brazilian Central Bank. 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”) (FRN 145930). This communication is intended for distribution to Professional Clients only if deemed to be a financial promotion in the UK as defined by the FCA. This communication may also be intended for certain EEA countries where Western Asset has been granted permission to do so. For the current list of the approved EEA countries please contact Western Asset at +44 (0)20 7422 3000.