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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.

Something For Everyone in July Payroll Data: Weak July Growth, But Strong Revisions to June

July payroll job data today showed something for everybody, with private-sector payrolls up only a disappointing 170,000, but the already strong June gain revised up by a whopping 53,000. We focus on a job measure that excludes the especially volatile construction and retailing sectors. That series reported a gain of 144,000, with an upward revision of 47,000 to June.

While other analysts have been extolling the low unemployment rate, our take has emphasized the fact that actual job growth has been slowing for most of the past two years. (How can the economy be accelerating when job growth is decelerating?) The July payroll data buttress that take, with job growth last month again back below the 2011-15 pace, after two above-average gains in May and June (see chart). Meanwhile, those bullish on the economy can focus on the admittedly strong May/June data. We’ll have to wait on the data for August and after to determine which is the trend going forward.

Meanwhile, wage data were similarly mixed, with hourly wages for all workers rising 0.26%, but wages for nonsupervisory workers up 0.13%, corresponding to annualized rates of increase of 3.2% and 1.6%, respectively. We have always paid more attention to the latter measure, arguing that it is nonsupervisory workers that actually get paid by the hour, whereas for the supervisory workers included in the all-worker measure, hourly wages are at best a guess. Still, there are differences of opinion here.

There is no debate about the fact that job growth has been strong in manufacturing, and that sector added another 37,000 jobs in July. July was the first month fully spanning trade war fears, and it appears that manufacturers generally were not concerned enough with those issues to cut back on hiring. Of course, the soft overall July job gains alongside strong factory gains indicate that service-sector job growth continues to slow.

Monthly Job Growth
Monthly Job Growth
Source: Bureau of Labor Statistics. As of 31 Jul 18

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.

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