U.S. employers added 256,000 jobs in December, defying expectations and highlighting the economy's continued resilience despite elevated interest rates.
Why It Matters
October's job figures were disrupted by hurricanes and a major strike at Boeing, leading to a dip in hiring. The subsequent rebound in November likely overstated the underlying strength of the labor market.
What To Know
The Labor Department reported Friday that job growth increased in December, rising from November's total of 212,000.
The unemployment rate edged down to 4.1 percent in December, a slight decline from November's 4.2 percent.
In 2024, the U.S. economy added 2.2 million jobs—a robust figure, though lower than the 3 million jobs gained in 2023, 4.5 million in 2022, and the record-breaking 6.4 million in 2021, when the labor market rebounded sharply from pandemic-driven layoffs.
The monthly jobs report exceeded expectations, with 155,000 new positions projected and unemployment forecast at 4.2 percent. Healthcare companies led hiring with 46,000 new jobs, followed by retailers adding 43,000 and government agencies at federal, state, and local levels contributing 33,000 positions.
Revised figures from the Labor Department reduced October and November payroll totals by 8,000 jobs.
Average hourly wages increased by 0.3 percent in December and were up 3.9 percent compared to the previous year, falling slightly short of economists' projections for annual growth.
Impacts on Job Market
Gaining a clear picture of the U.S. job market has been challenging in recent months.
October's employment figures were skewed by hurricanes and a significant strike at Boeing, which suppressed job growth for the month. The rebound in November, while strong, likely overstated the labor market's actual momentum.
Job Openings
Earlier this month data from the Labor Department's latest Job Openings and Labor Turnover Survey (JOLTS) showed U.S. job openings unexpectedly climbing to 8.1 million in November.
The rise highlighted steady labor demand despite a cooling economy and persistent inflationary pressures. These figures showed an increase from October's revised figure of 7.8 million. Job openings remain below last year's 8.9 million and far below the peak of 12.2 million in March 2022, when the economy was rebounding from the COVID-19 pandemic. Job openings also continue to exceed pre-pandemic levels, reflecting a labor market still adjusting to post-pandemic dynamics.
The American labor market has steadily cooled from its record-setting hiring in 2021-2023, when monthly job growth averaged as high as 604,000. By 2024, that number slowed to 180,000 through November.
What People Are Saying
Thomas Simons, chief U.S. economist at Jefferies, noted that seasonal adjustments during the holiday period might have influenced December's employment figures. However, he emphasized that "it is hard to say anything negative about the details of this report."
Nancy Vanden Houten, lead U.S. economist at Oxford Economics, argued in a commentary that current wage growth aligns with the Federal Reserve's inflation targets. She attributed this to robust gains in U.S. productivity, enabling businesses to boost wages and expand profits without increasing prices. "Earnings growth won't give the Fed any headaches," Vanden Houten wrote.
What's Next
Federal Reserve officials indicated during their December meeting that they intend to take a more measured approach to rate cuts in 2025, scaling back their projection to two reductions from the four anticipated in September. Inflation progress has stalled in recent months, with rates still exceeding the Fed's 2 percent target.
This article includes reporting from The Associated Press
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