Monthly US Employment Analysis - February 2020

February 2020 Monthly US Employment Analysis

Edward Leamer, Professor Emeritus, UCLA Anderson School
March 6, 2020

The happily high February 2020 payroll release of 273,000 jobs is exactly the same as the revised January number. While one great number by itself should add little to our optimism about the future, a second one is real news in the sense that two hits in a row should make us revise our forecasts upward.

The real news in these payroll 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 strong January number had little effect on the smoothed series using the total payrolls only and actually caused a decline in the smoothed series based on the components. But a second strong monthly payroll report causes a substantial upward revision for both ways of smoothing these data.

That optimism is implicitly premised on the absence of a coronavirus effect on payrolls, which could be small and could be substantial. Meanwhile, the weak stock markets seem to have ignored the payroll release.

Figure 1

UCLA Anderson Forecast