What’s the News in the November Payroll Release?

Still humming along, UCLA economist Edward Leamer writes of the latest jobs report

Los Angeles (December 6, 2019) — With the release of today’s November 2019 employment report, UCLA Anderson Professor Emeritus Edward Leamer offers an analysis of the data behind the report. Leamer, who is also director emeritus of the UCLA Anderson Forecast, writes that the latest payroll numbers show little change from last month, with the economy indicating strength.

Read on for Leamer’s analysis:

The November payroll release of 266,000 jobs is much greater than last month’s figure of 156,000, which was revised upward from 128,000. But it is difficult to discern the real meaning of that big increase 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 components of the payroll data like nondurable manufacturing. The actual and the smoothed versions are illustrated in the figure below.

THE NEWS: The smoothed series show little change from last month’s data. In the smoothed series, the latest data confirm that the jobs situation has completely recovered from a weakening in the summer, from May to August. We are now firmly back to payroll increases above 200,000, as we were experiencing a year ago, which is substantially above the 160,000 number during the summer.

The GM strike: Another way to filter the data

Another way to do the filtering is to take out one-time reversible swings like the GM strike. Durable manufacturing jobs fell from 50,000 in October but recovered 46,000 in November. If we add 50 to the October total and subtract 46 from November we get the sequence 193, 206, 220. That’s very close to the filtered series.

About UCLA Anderson Forecast
UCLA Anderson Forecast is one of the most widely watched and often-cited economic outlooks for California and the nation, and was unique in predicting both the seriousness of the early-1990s downturn in California and the strength of the state’s rebound since 1993. More recently, the Forecast was credited as the first major U.S. economic forecasting group to declare the recession of 2001. Visit UCLA Anderson Forecast at  uclaforecast.com.

About UCLA Anderson School of Management
UCLA Anderson School of Management is among the leading business schools in the world, with faculty members globally renowned for their teaching excellence and research in advancing management thinking. Located in Los Angeles, gateway to the growing economies of Latin America and Asia and a city that personifies innovation in a diverse range of endeavors, UCLA Anderson’s MBA, Fully Employed MBA, Executive MBA, UCLA-NUS Executive MBA, Master of Financial Engineering, Master of Science in Business Analytics, doctoral and executive education programs embody the school’s Think in the Next ethos. Annually, some 1,800 students are trained to be global leaders seeking the business models and community solutions of tomorrow.

Contact Information UCLA Anderson Media Relations, Rebecca Trounson, (310) 825-1348, rebecca.trounson@anderson.ucla.edu