US Payrolls Surge 256,000 in December, Unemployment Dips to 4.1 Percent

Last month’s reading was above the trailing 12-month average of 189,500.

Economists expected total nonfarm payroll employment additions to be 153,000, according to estimates collected by FactSet.

Additionally, the household portion of the monthly payroll report, which eliminates duplication, reported 478,000 new jobs in December 2024.

In total, the U.S. economy added 2.232 million new jobs in 2024.

The unemployment rate dipped to 4.1 percent from 4.2 percent and came below the consensus forecast.

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Average hourly earnings increased by 3.9 percent year over year, down from 4 percent, and fell short of economists’ forecasts. However, they rose by 0.3 percent month over month.

The labor force participation rate was unchanged at 62.5 percent. Average weekly hours were flat at 34.3.

Employment gains were broad-based, led by health care (46,000), retail (43,000), leisure and hospitality (43,000), government (33,000), and social assistance (23,000).

The manufacturing sector shed 13,000 jobs.

Full-time employment rose by about 90,000, while part-time employment surged by 247,000. The number of people working two or more jobs declined by about 100,000, to 8.478 million.

The number of employed foreign-born workers increased by about 342,000 from a year ago, and the number of employed U.S.-born workers jumped by approximately 200,000.

Market Reaction

The financial markets tanked immediately following the December 2024 jobs report. The tech-heavy Nasdaq Composite Index and blue-chip Dow Jones Industrial Average slumped by 200 points and 300 points, respectively.

U.S. Treasury yields rocketed on the news, with the benchmark 10-year yield firming above 4.78 percent. The 20- and 30-year yields reached 5 percent.

Yields in the bond market were searching for reasons to push higher, says Bryce Doty, senior portfolio manager and senior vice president at Sit Fixed Income Advisors.

“This report is going to fuel a continuation of higher yields and pushes off the next Fed rate cut off even further,” Doty said in a note emailed to The Epoch Times. “We might not see another rate cut until next quarter.”

The U.S. dollar index, a metric of the greenback against a weighted basket of six currencies including the euro and Japanese yen, spiked to end the trading week, soaring close to 110.00.

How This Impacts the Fed

Market watchers say the Federal Reserve will be attentive to further weakness in the U.S. labor market.

In recent months, Fed Chair Jerome Powell has stated that the central bank is neither seeking nor welcoming further cooling in the jobs arena.

“We do not believe that we need to see further cooling in labor market conditions to achieve 2 percent inflation,” Powell told reporters at the post-meeting press conference in September 2024.

The Fed had shifted its focus to the maximum employment side of its dual mandate. However, because inflationary pressures have rekindled, monetary policymakers have renewed their concentration on restoring price stability.

Indeed, in addition to the last several inflation reports, the “price paid” component of the Institute for Supply Management’s Services Purchasing Managers Index (PMI)—a monthly survey indicating the sector’s prevailing economic direction—alluded to a reacceleration in headline and core inflation.

Investors overwhelmingly expect the Fed to leave interest rates unchanged later this month.

Examining the US Labor Market

The U.S. labor market has remained intact, even as the Fed keeps interest rates higher for longer.

“The labor market downshifted to a more modest pace of growth in the final month of 2024, with a slowdown in both hiring and pay gains,” said ADP chief economist Nela Richardson.

Still, employers announced 761,358 layoffs for the year, the highest total outside the pandemic since 2009.