On a high note, the U.S. job market ended 2024, adding 256,000 jobs in December and pushing the unemployment rate down to 4.1%. This unexpected surge in hiring exceeded forecasts and showed the labor market’s resilience despite recent disruptions like strikes and storms. Wages also rose, with average hourly earnings increasing 0.3% from November, a 3.9% increase over the past year that outpaced inflation.
Scott Anderson, chief U.S. economist at BMO Capital Markets, said, “This employment report really crushes all expectations. It kind of wipes out the summer slump in payrolls from June to August before the big Fed rate cut in September.”
However, the Labor Department revised its job growth figures for the 12 months ending in March 2024 by 818,000. Still, the substantial December numbers point to renewed economic strength.
The robust job growth makes further interest rate cuts by the Federal Reserve less likely in the near future.
December job gains exceed expectations
Policymakers want to avoid reigniting inflation through more easing when the labor market is already strong.
The Fed is like, ‘We think this is a good labor market, we want to keep it that way, we don’t want it cooling further,'” said Guy Berger, director of economic research at the Burning Glass Institute. Job gains varied across sectors. Education and health added 80,000 jobs, with increases in leisure and hospitality, business services, and construction.
Manufacturing jobs declined; however, this reflects ongoing challenges. As the economy heads into 2025, the strong job market performance bodes well. However, the broader effects on monetary policy and inflation will be closely monitored in the months ahead.
