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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.

February Payroll Gains Rebound, Sort Of

Payroll job growth rebounded in February, after the soft January report. Private-sector payroll jobs were reported as rising 230,000 in February, with the previous two months' gains revised up by 30,000. This was essentially a mirror image of last month's news, when jobs growth was soft with downward revisions... and that January report was the mirror image of the December report.

So it goes. We talk a lot here about month-to-month random variation in the economic data. The payroll numbers are a "poster child" for this, with the whipsaw actions of recent months. Beneath all this monthly chop, payroll job growth appears to be continuing at a stable pace that the optimists say is "strong" and that other folks are less satisfied with.

While the February jobs news was better, there were some "asterisks" within the report. The jobs measure we track most closely, private-sector payroll jobs excluding construction and retailing, rose only 156,000 in February, and upward revisions to January still left that month's gains at only 105,000. Both of these gains are below the 166,000 per month average of the last few years, as seen in the accompanying chart.

In other words, much of the rebound in the headline number came from outsized gains in retailing (up 55,000) and construction (up 19,000). This would be fine if those gains are for real, but the reason we abstract from these two sectors is precisely because of their extremely volatile seasonal swings, especially at this time of year. (Before seasonal adjustment, retailing jobs fell by 142,000 in February, after a 278,000 decline in January, which is a testament to the seasonal volatility there.) It would be a stretch to tout any recent slowing in "underlying" job growth, but the last two months' data have been less than spectacular.

Another noteworthy aspect of today's report was renewed weakness in manufacturing jobs. These had shown an increase in January, but much of last month's gain was revised away this morning, followed by a sizable February decline. Despite rumors of a reversal, the factory soft patch remains in full swing.

Private-Sector Job Growth
US Economic Growth: Real and Nominal
Source: Bureau of Labor Statistics. As of 29 Feb 16.

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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