LPL Financial Research

What Does 300,000 Jobs Tell Us?

The December jobs report showed nonfarm payrolls grew by 312,000 last month, well above the median consensus estimate for a 184,000 increase. This was a record 99th consecutive month with positive jobs growth. The good news sparked a big equity rally on hopes that the U.S. economy remained on firm footing.

What does a 300,000 monthly print tell us? First things first: Be aware that the labor market is constantly growing—so 300,000 jobs last month isn’t the same as 300,000 jobs back in the mid-1980s. In fact, the total number of employed people is about 50% higher now than it was then. Still, 300,000 jobs is an impressive increase and one that could suggest a recession is a ways off. “The most recent jobs figure could be a great sign that a recession is still a long way off, as the previous two cycles didn’t see recessions begin until 13 and 23 months after the last 300,000 print,” explained LPL Senior Market Strategist Ryan Detrick.

As our LPL Chart of the Day shows, looking at the previous five cycles, it took an average of 12 months after the last 300,000 jobs print before a recession started—with the last two cycles actually taking longer. We remain in the camp that we probably won’t have a recession in 2019, and this is another potential bullet point to support that.

For more thoughts on the recent economic data, please be sure to read our Weekly Economic Commentary due out later today.


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