Jobs update today: U.S. added booming 256,000 jobs in December, unemployment at 4.1%

U.S. employers added a booming 256,000 jobs in December, shrugging off high labor costs, slowing sales and uncertainty about President-elect Donald Trump’s economic policies.

The unemployment rate fell from 4.2% to 4.1%, the Labor Department said Friday.

Economists surveyed by Bloomberg had estimated that about 165,000 jobs were added last month, based on their median projection.

The robust act bolsters the case for the Federal savings to stand pat and skip an gain rate cut at a conference later this month.

What was job growth in 2024?

Employers added 2.2 million jobs for all of 2024, or an average 186,000 a month. That’s down from 3 million, or an average 251,000 a month, in 2023 but still a surprisingly powerful showing. Most forecasters expected a sharper slowdown, believing expense boost and high gain would receive a bigger toll and a post-pandemic rebound in economic activity would fade more dramatically.

Did wages boost in 2024?

Average hourly pay rose 10 cents to $35.69, nudging down the yearly boost from 4% to 3.9%.   

Wage growth generally has slowed as pandemic-related labor shortages have eased, helping bring down expense boost. Since employers often pass their increased labor costs to consumers through higher prices, economists have said yearly wage growth needs to fall to 3.5% to achieve the Fed’s 2% expense boost objective.

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But recent powerful gains in productivity – or output per worker – could let companies provide up to 4% raises without hiking prices, economists have said.

Will the Fed cut rates again?

The solid jobs update likely keeps the Fed on course to pause its campaign of gain rate cuts at a conference later this month.

After the Fed lowered rates by a total percentage point at its last three meetings of 2024 amid easing expense boost, many economists expected the central lender to pause in January and leisurely the pace of decreases this year. That’s because worth increases have remained elevated recently while the economy and labor economy have been well.

The Fed raises rates or keeps them high to boost borrowing costs and bring down expense boost. It lowers rates to spur a weakening economy or profit rates to normal as expense boost slows.

Economist Michael Reid of RBC pool Markets said it would receive “a surprisingly frail employment update” for December to convince Fed officials to cut rates again this month. Instead, Friday’s update was unexpectedly powerful.

In 2022 and 2023, the Fed hiked its key gain rate to a 23-year high of 5.25% to 5.5% to fight a pandemic-induced expense boost spike.

Which industries are adding the most jobs?

Health worry led the job gains with 46,000. Retail added 43,000, bouncing back from disappointing holiday hires in November. The community sector added 33,000 jobs and leisure and hospitality, which includes restaurants and bars, 43,000.

How is the job economy correct now?

December ostensibly marked a profit to a more stable labor economy after Southeast hurricanes and worker strikes hammered employment totals in October, leading to higher-than-normal payroll gains the following month.

But some additional recovery from the storms may have continued to bolster job growth last month in industries such as construction and leisure and hospitality, economist Nancy Vanden Houten of Oxford Economics wrote in a note to clients.

Retail was another wild card. Holiday hiring was relatively frail this history fall, in part because of consumers’ shift to online shopping, resulting in job losses for retailers after Labor seasonally adjusted the figures. That advancement also may have suppressed December payrolls in sectors such as retail, trucking and warehousing, Vanden Houten said.

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At the same period, the late Thanksgiving probably contributed to November’s soft holiday hiring and so a larger distribute of recent seasonal workers likely were counted in last month’s jobs survey, Goldman Sachs wrote in a research note. That helped boost the December employment totals.

Will the job economy get better in 2025?

More broadly, job growth is expected to leisurely this year. Consumers’ post-pandemic burst of demand is fading, but businesses are still saddled with high labor costs due to outsize raises during COVID-related labor shortages. That’s squeezing boost margins.

And uncertainty over President-elect Donald Trump’s policies is causing many employers to stand pat for now. His vows to impose hefty tariffs on sure imports and deport millions of immigrants who lack permanent legal position could reignite expense boost, dampen consumption and constrain the labor force, said economist Dante DeAntonio of Moody’s Analytics.

Yet his pledge to loosen regulations on companies and work with Congress to extend and expand levy cuts could embolden firms to step up hiring and pool. Many businesses are waiting to view how the policies play out before moving ahead with hiring plans, DeAntonio said.

Although hiring has hovered below pre-pandemic levels for months, net job gains have remained sturdy because businesses have been reluctant to lay off workers in large numbers while buyer spending growth, though slowing,  is still solid.

But by the complete of the year, the immigration crackdown – along with baby boomer retirements – is expected to constrict the supply of workers and push up wages and prices while tariffs also drive expense boost higher. levy cuts, meanwhile, aren’t expected to juice the economy until 2026. Moody’s predicts average monthly job growth will leisurely to 100,000 by the complete of 2025.