Kathryn Rooney Vera, chief market strategist at StoneX, discusses the importance of cutting federal spending to make money.
The U.S. economy added jobs faster than expected in December as Federal Reserve policymakers closely monitor the strength of the labor market ahead of their scheduled meeting later this month.
The Labor Department reported Friday that employers added 256,000 jobs in December, well above the estimate by LSEG economists.
The unemployment rate stood at 4.1%, slightly lower than economists’ expectations.
The number of jobs created over the previous two months was revised, with October job creation revised up by 7,000, from a gain of 36,000 to 43,000; while November was revised down by 15,000, from a gain of 227,000 to 212,000. In total, these two months saw 8,000 fewer jobs created than previously reported.
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The private sector payroll created 223,000 jobs in December, much more than the 135,000 estimated by LSEG economists.
Wage growth was largely in line with expectations, with average earnings up 0.3% on a monthly basis and 3.9% compared to last year.
The manufacturing sector saw employment fall by 13,000 in December, a surprise drop when economists had forecast a gain of 5,000 jobs.
Health care added 46,000 jobs in December, with gains concentrated in home health care services (+15,000), nursing and residential care facilities (+14,000) and hospitals (+ 12,000). Health care added an average of 57,000 jobs per month in 2024, the same as the 2023 monthly average.
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The manufacturing sector lost 13,000 jobs in December. (It’s time, Chief Executive Officer Alexey Mordashov said on Thursday. REUTERS/Rebecca Cook/Reuters Photos)
The retail sector added 43,000 jobs in December after losing 29,000 jobs in November. Last month’s gains were concentrated in retailers of clothing, shoes and jewelry (+23,000), general merchandise (+13,000) and health and personal care products (+7,000). Retail trade lost jobs in building materials and garden equipment (-11,000).
Leisure and hospitality also created 43,000 jobs, an average gain of 24,000 per month in 2024.
The government created 33,000 jobs in December, slightly below the monthly average for 2024 of 37,000 jobs per month. Last year, government job growth was slower than in 2023, when the average monthly gain was 59,000 jobs.
Social assistance employment increased by 23,000 last month, most of it in individual and family services (+17,000). The sector created an average of 18,000 jobs per month in 2024, slightly less than the average of 23,000 in 2023.
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The activity rate remained unchanged at 62.5%, unchanged from a month ago, and it has remained within a narrow range of 62.5% to 62.7% since December 2023.
The number of people considered long-term unemployed, defined as being out of work for 27 weeks or more, was little changed in December at 1.6 million, but is up 278,000 from last year. The long-term unemployed represented 22.4% of all unemployed last month.
Fed Chairman Jerome Powell has indicated that the Fed may slow the pace of interest rate changes in response to labor market conditions and inflation data. (Seth Herald/Bloomberg via Getty Images / Getty Images)
The December jobs report comes as the Federal Reserve is scheduled to hold its next meeting in late January to discuss a possible rate cut. Fed Chairman Jerome Powell signaled after the last 25 basis point cut in December that policymakers could slow the pace of rate changes based on incoming labor market and inflation data.
“The surprisingly good jobs report is certainly not going to make the Fed less hawkish,” said Ellen Zentner, chief economic strategist at Morgan Stanley Wealth Management. “All eyes will now be on next week’s inflation data, but even a downward surprise in these numbers likely won’t be enough to prompt the Fed to cut rates in the near future.”
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Market expectations that the Fed would hold rates steady at its January meeting were reinforced by the December jobs report. The probability that the Fed will keep its benchmark federal funds target in a range of 4.25% to 4.5% rose to 97.3% on Friday, from 93.6% a day ago.
“Today’s report is further evidence that the labor market remains stable, providing more cover for the Federal Reserve to tread carefully on its path to easing rates and more for job seekers. “employment is looking for signs of acceleration outside of a few sectors that make up the bulk of job creation,” said Kory Kantenga, economic manager at LinkedIn.
This is a developing story. Please check again for updates.
