Global| Mar 11 2019Payroll Job Data Not A "Fluke": Reflects Slower Growth in Q1
|in:Viewpoints
Summary
Payroll employment increased by only 20,000 in February, following a 311,000 gain in January. Many analysts quickly dismissed the small gain in payrolls, arguing that it was inconsistent with other labor market indicators and some [...]
Payroll employment increased by only 20,000 in February, following a 311,000 gain in January. Many analysts quickly dismissed the small gain in payrolls, arguing that it was inconsistent with other labor market indicators and some went as far as calling it a "fluke". Yet, if there was a "fluky" number it was January’s payroll gain and February’s figures were merely a correction to a temporary and inflated gain of the prior month, bringing job growth more in line with current estimates of Q1 GDP growth.
The payroll data published by the Bureau of Labor Statistics (BLS) is based on the number of employees who worked for private and public establishments and received pay for any part of the survey pay period. In this survey, people could be counted more than once, if more than one employer pays them. In January, something very unusual occurred in that approximately 800,000 federal workers were not at work due to the government shutdown, but were still classified as being employed since they would eventually be paid for their time away from work.
How many of these employed/not at work federal workers went looking for temporary work until the government shutdown was over is hard to say. Yet, it is possible to glean some insight on this issue by inspecting job data from the household survey.
The household survey records the number of people working, and it also classifies people working/moving from full and part-time jobs. In January, the household employment report showed an unusual jump of 602,000 people working part-time for "slack work or business conditions" in nonagricultural industries, followed by equally large decline of 655,000 in the same category in February.
The volatility in these numbers is very unusual even for a job category that is known to be notorious for being volatile. Nonetheless, the data does offer some proof that there was some unusual movement in the workforce in the last two months that could be attributable to a number of government workers being counted twice in January’s payroll data as they gained temporary part time work and only one time in the February report when they left their part-time job and returned to their regular full time jobs in the federal government.
Due to conceptual and measurement difference one cannot apply the household data to the payroll series, but judging from some of the business establishments that employ a large number of part-time workers---leisure, retail and transportation---these firms added 120,000 jobs in January and reduced headcount by nearly 20,000 in February.
Even if that sign was reversed and then doubled it would still leave the payroll job gain in February at a relatively low number. Yet that should not come as a surprise. Consensus estimates of Q1 GDP growth range from 0.5% to 1.5%, so its not surprising to see relatively slow job creation---it’s a barometer on how slow the economy is growing in Q1, and should not be characterized as a "fluke."
Joseph G. Carson
AuthorMore in Author Profile »Joseph G. Carson, Former Director of Global Economic Research, Alliance Bernstein. Joseph G. Carson joined Alliance Bernstein in 2001. He oversaw the Economic Analysis team for Alliance Bernstein Fixed Income and has primary responsibility for the economic and interest-rate analysis of the US. Previously, Carson was chief economist of the Americas for UBS Warburg, where he was primarily responsible for forecasting the US economy and interest rates. From 1996 to 1999, he was chief US economist at Deutsche Bank. While there, Carson was named to the Institutional Investor All-Star Team for Fixed Income and ranked as one of Best Analysts and Economists by The Global Investor Fixed Income Survey. He began his professional career in 1977 as a staff economist for the chief economist’s office in the US Department of Commerce, where he was designated the department’s representative at the Council on Wage and Price Stability during President Carter’s voluntary wage and price guidelines program. In 1979, Carson joined General Motors as an analyst. He held a variety of roles at GM, including chief forecaster for North America and chief analyst in charge of production recommendations for the Truck Group. From 1981 to 1986, Carson served as vice president and senior economist for the Capital Markets Economics Group at Merrill Lynch. In 1986, he joined Chemical Bank; he later became its chief economist. From 1992 to 1996, Carson served as chief economist at Dean Witter, where he sat on the investment-policy and stock-selection committees. He received his BA and MA from Youngstown State University and did his PhD coursework at George Washington University. Honorary Doctorate Degree, Business Administration Youngstown State University 2016. Location: New York.