The U.S. economy added 256k jobs in December, well above the consensus forecast calling for a gain of 165k. Payroll figures for October were revised up by 7k (to 43k), while November was revised lower by 15k (to 212k), resulting in a total net revision of -8k over the two prior months.
- For the year, job growth totaled 2.2 million, down from 2023’s 3.0 million, but a still solid year of hiring.
Private payrolls rose 223k – up from November’s 182k – with the largest gains seen in health care & social assistance (+69.5k), leisure & hospitality (+43k), and professional & business services (+28k). The public sector added 33k new positions last month.
In the household survey, civilian employment surged by 478k – more than reversing November’s sharp pullback – while the labor force grew by a smaller 243k, pushing the unemployment rate 0.1 percentage points lower to 4.1%. The labor force participation rate held steady at 62.5%.
- The household survey figures for December also included the usual updated seasonal adjustment factors. However, there was no discernable impact on monthly unemployment rate readings for 2024.
Average hourly earnings (AHE) rose 0.3% month-on-month (m/m), a tick lower than November’s gain. On a twelve-month basis, AHE were up 3.9% (also a tick lower than November). Aggregate weekly hours rose 0.2% m/m, up from November’s downwardly revised reading of 0.1% m/m (previously 0.4% m/m).
Key Implications
Non-farm payrolls end 2024 on a solid footing, coming in well above nearly all surveyed economist forecasts in Bloomberg. Smoothing through the recent volatility, job growth averaged 170k per-month in the fourth quarter, down from Q4-2023’s monthly average of 212k. Meanwhile, the unemployment rose by 0.3 percentage points last year, but remains low at 4.1%.
There were virtually no signs underlying weakness in the labor market in this morning’s employment report. And with progress on the inflation front showing signs of stalling in recent months, Fed officials have all the evidence they need to slow the pace of rate cuts. We still a view a March cut as likely (Fed futures are currently pricing a less than 25% probability for a March cut), though the next few months of data will be critical in shaping the final decision.
