1Q19 Witten Advisory Excerpt: As part of that headline volatility, recent economic data has bounced around considerably. Perhaps that’s due to the gyrations in the bond and stock markets, the government shutdown, extreme weather, or 1Q biases in the collection procedures, but we don’t know for certain. What we do know is in the above chart. After adding 311K jobs in January, job growth plunged to only 20K last month. A monthly gain of 20K is not representative of actual market conditions – probably just a statistical anomaly after outsized growth in the first month of the year.
Tomorrow, we’ll receive updated numbers through March. Yesterday, ADP reported that private payrolls expanded by 129K jobs in March, while this morning we learned that jobless claims dipped to a 49-year low. Both of these indicators suggest solid job growth last month, and also support the consensus forecast for nonfarm payrolls of a 175K gain in March.
The annual run rate at the top is more indicative of the underlying job growth trend, and shows that the economy gained momentum last year. Even with slower hiring this year, the nation added 2.5m jobs during the past twelve months – 25% more than the economy was producing in early 2018. This re-acceleration surprised the macro forecasting firms we follow, as the tax-code overhaul and larger wage gains lured more people back into the workforce.