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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.

October Payroll Gains Only Partially Offset Hurricane-Related September Softness

Private-sector payrolls rose a nice 252,000 in October, on top of 90,000 of upward revisions to the September level. For the payroll measure we focus on, private-sector jobs excluding construction and retailing, jobs rose by 249,000 in October, with 53,000 of upward revisions to September’s level.

As robust as these gains sound, it is worth emphasizing that they only partially offset the weakness seen in September related to hurricane effects. You can see this visually in the accompanying chart. Find the point midway between the abysmal September gains and the “robust” October gains, and you will see that that midpoint is below the prevailing trend growth rates for both series shown in the chart.

In terms of the numbers, our favored payroll measure shows an average gain of 123,000 over the last two months (a 3,000 job loss in September offsetting most of the 249,000 gain for October), which on average is well below the 169,000 average gains this series shown over 2011-15. As we have remarked continually in our installments of “By the Numbers,” job growth has slowed over the last two years, not dramatically, but enough so that claims of accelerating consumer spending to come are far-fetched. No matter how buoyant the stock market is, consumption is quite unlikely to speed up when job growth and income growth are slowing down.

In line with that thought, hourly wage data for October showed a slight decline, effectively negating the apparently strong wage gains shown for September. A month ago, we thought those wage data were just as distorted as the jobs data. Because low-wage workers were more likely to be “off payroll” in the Gulf Coast states due to the hurricanes, the average wage data for September were biased upward. Today’s news supports this contention. Averaging the September and October wage gains together, hourly wages for production workers have risen at only a 2.4% rate over the past six months, compared with 2.7% growth this time a year ago. Similarly, hourly wages for all workers have grown at a rate of 2.7%, compared with 2.8% growth this time a year ago.

It could be that there are still some hurricane effects in these data. We’ll find out next month for sure, but in the meantime, the payroll data on most counts belie claims that the economy is accelerating.

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

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