The U.S. economy ended 2024 on a high note, with job creation far exceeding what economists had predicted, signaling a resilient labor market, according to the Bureau of Labor Statistics.
- Nonfarm payroll employment increased by 256,000 jobs in December, the best monthly performance since March. This was significantly higher than the anticipated 160,000 jobs.
- The unemployment rate fell to 4.1% from an expected 4.2%.
By The Numbers: In terms of sector performance, health care led with an addition of 46,000 jobs, followed by retail with 43,000, government with 33,000, and social assistance adding 23,000.
- Despite the jump in jobs, wage growth was less impressive, with a monthly rise of just 0.3% from November, down from the previous month’s 0.4%, and annual wage growth slowed to 3.9%.
Mixed Revisions: There were adjustments in previous months’ data too; October’s numbers were revised up by 7,000, while November’s were revised down by 15,000.
Rates: The market responded with the 10-year Treasury yield rising to 4.79%, an increase of 10 basis points from the day before, marking the highest level since October 2023.
Bottom line: unexpected strength in the job market could influence the Federal Reserve’s approach to monetary policy in 2025, potentially leading to fewer rate cuts and maintaining higher interest rates for a longer period.