Wells Fargo: “Nonfarm Payrolls: Too Good to Be True?”

From House and Pugliese at WF today:

  • The buoyancy of nonfarm payroll growth has seemed at odds with other signs that the jobs market is beginning to sour. …
  • Yet the jobs market is hardly falling apart. A holistic look at the data suggests that directionally the labor market is weakening, but at a measured pace and from a remarkably strong starting point. Not only do signals of demand remain strong on an absolute basis, but job switching remains elevated and the unemployment rate remains exceptionally low at 3.7%.

They include several graphs which support the view of growing employment/light labor market conditions in 2022H1.

Here’s the labor market heat map, with a 2022H1 circled in red.

Source: Wells Fargo (1/5/2023).

The predominance of green/yellow highlighting is certainly not suggestive of a recession beginning in 2022H1.

The authors do note that the labor market is cooling off, perhaps faster than indicated by the establishment survey – informing views on the current outlook.

 

 

 

2 thoughts on “Wells Fargo: “Nonfarm Payrolls: Too Good to Be True?””

  1. pgl

    “A holistic look at the data suggests that directionally the labor market is weakening, but at a measured pace and from a remarkably strong starting point. ”

    Wait, wait – doesn’t Princeton Steve define holistic as claiming the sky is falling?

  2. pgl

    ‘The buoyancy of nonfarm payroll growth has seemed at odds with other signs that the jobs market is beginning to sour. We look for nonfarm payroll growth to downshift more noticeably in the months ahead, beginning with December’s employment report showing hiring slowing to 205,000.’

    BLS report is out and the payroll survey indicated an increase = 223,000.

    The household survey says the increase was 717,000.

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