In case you missed it: The @BLS_gov employment report for December reported persistent low unemployment at 4.1%, along with job growth in multiple sectors. ? Here are the notable takeaways. pic.twitter.com/1nSMOlcJiJ
— U.S. Department of Labor (@USDOL) January 11, 2025
In December, the U.S. economy generated 256,000 jobs, significantly outpacing economist projections of 165,000 and surpassing November’s 212,000 job creation. The unemployment rate decreased to 4.1%, down from 4.2% the previous month, reflecting the strongest monthly job increase since March 2023. Revisions for the 2024 unemployment rate indicated a more robust labor market than first estimated, with the cycle high adjusted to 4.2%.
Thomas Simons, a U.S. economist at Jefferies, remarked, “This is undeniably a solid report.”
The economy saw an addition of 256,000 jobs in December, with gains noted in healthcare, retail, and government sectors. Take a look at the highlights from the latest @BLS_gov report. pic.twitter.com/rBK0VhMxDA
— U.S. Department of Labor (@USDOL) January 10, 2025
An impressive jobs report today: 256,000 jobs created, and the unemployment rate dips to 4.1%. Steady participation and hours, paired with rising prime-age employment, while the modest nominal wage growth provides reassurance to the Fed. Some of this could be recovery from strikes and natural disasters. pic.twitter.com/b8Ncd8JQSr
— Jason Furman (@jasonfurman) January 10, 2025
Wage growth, a significant measure of inflationary pressures, increased by 0.3% in December, aligning with economist expectations, but below November’s 0.4%. On a year-over-year basis, wages rose by 3.9% in December, down from 4% in the previous month. The labor force participation rate held steady at 62.5%.
More employment opportunities. Diminished unemployment. President Biden along with his administration have achieved significant successes for American workers—and it’s crucial to find common ground to build on them! https://t.co/bKe52hBAWj
— Randi Weingarten ??????? (@rweingarten) January 10, 2025
The encouraging labor market data revealed in Friday’s report led investors to adjust their outlook on when the Federal Reserve might lower interest rates. The probability of a rate cut before June is now below 50%, reversing previous expectations of a May cut. EY’s chief economist, Gregory Daco, stated, “We’re observing a consistent yet slightly cooling trend in the labor market, which is quite positive from the Fed’s perspective.”
He added, “I anticipate that attention will shift back to inflation trends over the next three months.”
After the report was released, stock prices fell, with futures linked to the three primary indices down nearly 1%.
Resilient labor market pushes back rate cut
The yield on 10-year Treasuries climbed approximately 8 basis points to hit 4.78%, the highest level since November 2023.
Steve Sosnick, chief strategist at Interactive Brokers, remarked, “The current dilemma is that if you’re expecting rate cuts due to a weakening labor market… you should stop expecting them. It’s not imminent.”
Even with the remarkable job creation, several prominent companies have revealed plans for layoffs and job cuts for 2025.
Major tech companies, including Google, IBM, Tesla, TikTok, Snap, and Dropbox, initiated job reductions in 2024, capitalizing on advancements in artificial intelligence (AI). Additional firms, such as a certain unnamed company, an investment company, Bridgewater, The Washington Post, and an online banking firm, have also announced workforce reductions. While AI contributes to the job cuts, there remain opportunities for workers equipped with the right skills.
Job growth was particularly strong in non-cyclical sectors like healthcare, which added 46,000 positions, and retail and leisure/hospitality, each growing by 43,000 jobs last month. In summary, the U.S. labor market concluded 2024 on a favorable note, showcasing impressive job growth and a declining unemployment rate. However, the availability of opportunities varies across industries, especially for knowledge workers in technology and finance, as the job growth landscape continues to evolve in 2025.
