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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.

May Payroll Jobs Show Good Headline Gains . . . Details a Little Soggier

Private-sector payroll jobs showed a gain of 213,000 in May, with a 15,000 upward revision to the April level. Strip out the volatile construction and retailing sectors—to get my "core" jobs measure—and the May gain was 162,000, with an 11,000 DOWNward revision to April. As you can see in the chart, the May performance for this core jobs measure (blue line) was just below the average for the last few years, though a bit better than what we have seen on average over the last eight months.

Why strip out construction and retailing? Because these sectors exhibit large seasonal swings that are hard for the government stat-men to seasonally adjust properly, so that large gains or losses there one month tend to be reversed in subsequent months. As you can see in the chart, while both lines are volatile from month to month, the green line—including construction and retailing—does show more short-term "chop" than does the blue line.

In May, on a seasonally adjusted basis, construction jobs grew by 25,000, while retailing jobs grew by 31,000. With construction spending growing steadily but slowly and brick-and-mortar retailers losing market share to online vendors, it is hard to believe that either sector would suddenly step up hiring last month, as the available data suggest.

Net of these two sectors, job growth is proceeding at a decent pace, but nothing spectacular, and, again, generally slower than what we have seen over the past few years. This may be consistent with full employment, but it is not consistent with a supposedly accelerating rate of economic growth.

Manufacturing jobs showed another nice gain in May, up 18,000. Manufacturing has been a bright spot for the economy over the last two years, and this rebound continued last month.

Similarly, the May data showed good wage gains, with both the all-worker and production-worker hourly wage measures up by 0.3%.

All in all, there was no bad news within today's report, but neither was there anything causing us to question our below-consensus economic growth forecast for this year.

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

Michael Bazdarich

Product Specialist/Economist

Mike brings more than 44 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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