U.S. job growth surged in December, with nonfarm payrolls rising by 256,000, beating forecasts of 160,000. The unemployment rate fell to 4.1%, signaling labor market resilience despite recent Federal Reserve rate hikes. Employment gains spanned industries, including healthcare (+46,000), retail (+43,000), and leisure and hospitality (+43,000), while manufacturing lost 13,000 jobs.
Average hourly earnings grew 0.3% in December and 3.9% year-over-year, supporting consumer spending. The labor force participation rate held steady at 62.5%, while the employment-to-population ratio rose to 60.0%. Permanent job losses dropped by 164,000, and the median unemployment duration decreased to 10.4 weeks.
Economists see little chance of a Fed rate cut at its January meeting, as strong job growth and wage gains align with the central bank’s cautious stance. Markets expect the Fed to hold its benchmark rate at 4.25%-4.50%, with potential rate cuts delayed until mid-2025.
December’s report caps a solid year, with 2.23 million jobs added, averaging 186,000 per month. Though below 2023’s pace, the gains reflect labor market stability, helping the economy expand at a robust pace above the Fed’s 1.8% non-inflationary growth rate.
The upbeat data underscores U.S. economic resilience, easing concerns about labor market deterioration. However, uncertainty lingers over inflation risks tied to policy shifts under President-elect Donald Trump. “The labor market is in good shape and appears to be tightening,” said Conrad DeQuadros, senior economic advisor at Brean Capital.
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