U.S. employers added 256,000 jobs in December, pushing the unemployment rate down to 4.1 percent. This robust gain surpassed forecasts and marked a strong conclusion to a year of economic turbulence. The Labor Department’s report on Friday showed the labor market overcame a summer slowdown and disruptions from labor strikes and storms in the fall.
Average hourly earnings rose 0.3 percent from November and 3.9 percent over the previous year, staying above inflation. “This employment report crushes all expectations,” said Scott Anderson, chief U.S. economist at BMO Capital Markets. “It wipes out the summer slump in payrolls we saw from June to August before the big Federal Reserve rate cut in September.”
However, the strong job growth may complicate the Federal Reserve’s decisions on future interest rate cuts.
Policymakers could hesitate to implement further easing, as robust labor market growth could reignite inflation.
Job growth exceeds expectations in December
“The Fed thinks this is a good labor market and wants to keep it that way.
They don’t want it cooling further,” said Guy Berger, director of economic research at the Burning Glass Institute. “What they haven’t said is they want to heat the labor market back up.”
The report showed job growth across multiple sectors in December 2024. Education and health added 80,000 jobs, followed by leisure and hospitality, business services, and construction.
However, manufacturing experienced a decline in jobs. Despite these positive indicators, preliminary revisions from the Labor Department revealed 818,000 fewer jobs were added over the 12 months ending in March 2024 than originally reported, adjusting the overall labor market picture. This strong year-end labor market performance provides an optimistic outlook for the U.S. economy, albeit with a cautious note regarding future monetary policy moves.
