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- In December the U.S. added more than 256,000 new jobs, exceeding expectations of a 155,000 increase.
- This is the strongest job growth in March. It paints a picture that the labor market has a strong foundation.
- As a result of the increase in employment, it was less likely the Federal Reserve would reduce its benchmark rate soon. There was also less pressure to boost the economy and prevent mass job losses.
Instead, it accelerated.
The Bureau of Labor Statistics announced Friday that U.S. companies added 256,000 new jobs in December. This is up from the revised 212,000 positions in November. It was the most jobs added in any single month since March and blew past the 155,000 forecasters had expected, according to a survey of economists by Dow Jones Newswires and The Wall Street Journal. The median forecasters predicted that the unemployment rate would remain at 4,2%.
Solid job growth has a dual-edged effect on the economy. One the one hand it decreases the likelihood that there will be a massive wave of job cuts, which some experts had warned about. The Federal Open Market Committee – the Fed’s group responsible for setting monetary policy – has less of a reason to reduce its interest rates to stimulate the economy.
“Today’s job report suggests we shouldn’t expect to see a rate cut coming out of the next few FOMC meetings,” Elyse Auenbaugh is the head of J.P. Morgan Wealth Management’s investment strategy. She wrote a comment. “The data underscored that this is a strong economy that doesn’t currently need meaningful additional policy easing to see its expansion persist.”
Investors have lowered their expectation that the Fed would cut rates in any way by 2025. Financial markets priced a 28 percent chance of no Fed rate cut in 2025. That’s up from 14 percent the day prior, says CME Group’s FedWatch tool. It forecasts rates based on futures trade data.
A 'Healthy' Job Market
Health care added 46 000 jobs in total, which is the highest number of all sectors. This was followed by retail (43,000) and government (33,000). The unemployment rate was relatively low by historical standards but above 2023's five-decade low of 3.4%.
The job market’s data in the last few months has been mixed. Unemployment is at a record low, yet layoffs are still near historical levels.
The most recent available data shows that there was a ratio of 1.1 unemployed workers to every job opening in November. This is lower than the pre-pandemic level. In December, the unemployment rate rose to 26%, up 21% from November.
“The job market closed 2024 in pretty good shape,” Bill Adams, Chief economist at Comerica Bank wrote an email. “The unemployment rate is no longer at a fifty-year low but still indicates that most Americans who want jobs have them.”
Update, Jan.10, 2024: This article has been updated with additional commentary from economists and statistics from Friday's report.
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