U.S. job market surprises with strong December growth

U.S. job growth in December blew by economists’ expectations and the national unemployment rate ticked down in the final month of 2024, according to a Friday report from the U.S. Labor Department.

Total non-farm payroll employment increased by 256,000 positions in December as average unemployment across the country came in at 4.1% for the month, down from November’s 4.2% rate, according to the latest Employment Situation Summary from the Bureau of Labor Statistics.

Dow Jones consensus expectations ahead of the report had pegged December job growth at 155,000.

December job gains were boosted by the health care sector, which added 46,000 new positions for the month, 33,000 new government-related jobs and a bounce back month for U.S. retail business which grew payrolls by 43,000 new employees after losing 29,000 positions in November. Leisure and hospitality companies made 43,000 new hires last month, according to the report.

The latest state-level data for Utah, reported by the Department of Workforce Services last month, showed the state had a 3.5% unemployment rate in November and Utah businesses added 30,900 positions for the month.

U.S. workers also saw, on average, their wages grow by 0.3% on a monthly basis in December and earnings are up 3.9% over the last 12 months, according to the new Labor Department report.

Gus Faucher, chief economist at PNC Financial Services Group, told The Associated Press he was impressed by December data that showed a combination of strong job growth, falling unemployment and modest wage increases that take the edge off the inflationary threat.

“You put all that together, and it looks very good from an overall economic standpoint,” Faucher said.

How will the Fed react?

The new jobs and wage data is likely to add fuel to the Federal Reserve’s wait-and-see approach on interest rates, a position foreshadowed at the monetary body’s final meeting of the year in December.

The Fed’s Open Market Committee voted 11 to 1 to cut its benchmark rate by 0.25% last month but dialed back its outlook for 2025 and signaled there may only be two additional reductions this year.

That’s mostly thanks to pesky inflation that continues to hover north of the Fed’s 2% goal as the U.S. economy outperforms expectations, and the rest of the world, according to Federal Reserve Chairman Jerome Powell.

“The U.S. economy is just performing very, very well, substantially better than our global peer group,” Powell said at a Dec. 18 press conference. “The outlook is pretty bright for our economy … but we have to stay on task.”

The Fed’s two-part task, as mandated by Congress, is to maintain price stability alongside maximum unemployment. While the monetary body battled a post-pandemic inflation surge by levying 11 straight rate increases that raised its benchmark rate to 5.25% to 5.5%, the highest in 23 years. December’s cut, along with reductions in September and November, have brought the Fed’s overnight intra-bank lending rate down to 4.25% to 4.5%.