Monthly US Employment Analysis - December 2019

December 2019 Monthly US Employment Analysis

Edward Leamer, Professor Emeritus, UCLA Anderson School
January 10, 2020

The December payroll release of 145,000 jobs is noticeably smaller than last month’s number of 256,000. But it is difficult to discern the real meaning of that big reduction because the payroll data have some extreme ups and downs, with a big increase followed in the next month by a corrective big decrease.

The real news in these releases can be captured by two smoothed series, one based on just the overall payroll data and another one that includes the components of the payroll data like nondurable manufacturing. The actual and the smoothed versions are illustrated in the figure below.

THE NEWS: The fall in total payroll jobs this month is mostly because last month’s number was exceptionally high. The smoothed series based on overall job growth shows little change from last month’s data, still above 200,000; however, the smoothed series that accounts for the composition of payrolls noticeably softened. This is because of weakness in manufacturing, captured by two figures below. One figure is the early-warning sign of weakness in manufacturing – a decline in overtime and a reduction in average weekly hours in manufacturing. The other figure illustrates no growth in jobs in durables during 2019 and a slight softening in nondurables. Expect further weakness in manufacturing in 2020.

Figure 1

Manufacturing Images

Figure 2

Figure 3

UCLA Anderson Forecast