Nonfarm Payroll Employment Growth In Context

Blockbuster (absolute level) growth number for nonfarm payroll employment. But does the percentage growth rate in NFP dispell the prospect of a recession in the near future? I don’t think so.

(Click on image to enlarge)

Figure 1: Growth rate in nonfarm payroll employment, month-on-month annualized (blue), and year-on-year (red). NBER recession dates shaded gray. Green dashed line at June 2016 M/M annualized growth rate. Orange shading denotes Trump administration. All growth rates calculated as log differences. Source: BLS, NBER, author’s calculations.

As can clearly be seen, the recent growth rate (as opposed to change in level) is not particularly impressive, and similar M/M growth rates have been recorded within months of the beginning of a recession: 9 months before the 2007-09 recession, and 4 months before the 2001 recession.