The Employment Situation report from the Bureau of Labor Statistics provides lots of data on the labor market every month. There tends to be lots of noise in the data and lots of noise about the data. We prefer to cut to the chase by computing just one number based on the report, i.e., our earned income proxy.
It is simply aggregate hours worked by all payroll employees times their average hourly earnings during the month. It reflects the number of people working, the hours in their workweek and their wage rate. It is highly correlated with aggregate wages and salaries in the private sector and jumped 0.7% for the second straight month during December to a record high. Aggregate hours rose 0.4% and wages increased 0.3% last month. This measure is also highly correlated with retail sales, suggesting a strong sales number will be reported on Jan. 15 for the final month of last year.
Source: Ed Yardeni — Ed Yardeni is the president and chief investment strategist of Yardeni Research Inc., a provider of independent investment strategy and economics research for institutional investors.