The U.S. job market ended 2024 on a high note, with employers adding a robust 256,000 jobs in December, according to the Labor Department’s report on Friday. This unexpected surge in hiring caused the unemployment rate to dip to 4.1%, signaling a potential renewed vigor in the labor market. Throughout 2024, the labor market had been gradually cooling, but December’s figures suggest a possible turnaround.
Key sectors driving this job growth included health care, government, social assistance, and leisure and hospitality. The retail sector also rebounded, adding 43,000 jobs after a primarily stagnant year. Joe Brusuelas, chief economist at RSM, referred to U.S. job market dynamics in 2024 as marked by “American exceptionalism.” Thomas Simons, chief U.S. economist at Jefferies, remarked, “It is hard to say anything negative about the details of this report.”
Financial markets responded swiftly to the strong jobs data.
Concerns over persistent inflation and government borrowing were amplified, causing stocks and bonds to tumble. The yield on the 10-year U.S. Treasury note rose by 0.17 percentage points for the week, reaching levels not seen since late 2023. This also led to an increase in the 30-year mortgage rate.
S&P falls amid job growth surge
The S&P 500 index dropped 1.9% for the week, primarily attributed to Friday’s bond market turmoil. The dollar continued its upward trajectory, as higher U.S. interest rates attracted global investors.
In Europe, similar worries led to increased bond yields in Britain and Germany. The strong jobs report has also influenced expectations regarding the Federal Reserve’s future actions on interest rates. Matthew Ryan, head of market strategy at Ebury, noted that the report effectively rules out further rate cuts for the foreseeable future, possibly extending through all of 2025.
President Biden took this opportunity to underline his administration’s economic accomplishments, stating, “Although I inherited the worst economic crisis in decades with unemployment above 6% when I took office, we’ve had the lowest average unemployment rate of any administration in 50 years with unemployment at 4.1% as I leave.”
The retail sector, a critical component of end-of-year job data, demonstrated its seasonal hiring vitality. Retailers succeeded in hiring 43,400 workers in December, a sharp rise from the 29,000 jobs lost in November. This hiring spree was fueled by demand in clothing, shoes, jewelry, general merchandise, and health and personal care, reflecting the sector’s overall health during the holiday season.
In summary, the surprisingly strong job growth in December 2024 has ignited optimism for the U.S. economy’s strength and resilience as it heads into the new year, leaving economists and analysts cautiously hopeful for sustained recovery and growth.
