The data confirm the labour market held up last year despite high borrowing costs, lingering inflation and political uncertainty. While demand for workers moderated and the unemployment rate rose in 2024, the economy still added 2.2 million jobs — below the 3 million increase in 2023 but above the 2 million created in 2019.
What’s more, the report included annual revisions to the unemployment rate. Notably, the peak rate in July — which was initially reported as 4.3% and helped lay the groundwork for a full percentage point of rate cuts by the Fed later in the year — was revised lower, suggesting the labour market was somewhat more resilient over the summer than previously thought.
Friday’s figures are likely to support policymakers’ intent to move cautiously this year amid an apparent stalling in progress toward their 2% inflation goal. Traders pushed back expectations for the next rate cut to later in the year following the release. Reports on consumer and wholesale prices due next week will offer more clues on the direction inflation is headed ahead of the Fed’s next policy meeting on Jan. 28-29.
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“Worries about the risk of a sharp deterioration in labour-market conditions back in September — when the Fed started cutting rates — have more or less evaporated, and it seems pretty certain that the pace of Fed rate cuts is now going to slow down,” Brian Coulton, chief economist at Fitch Ratings, wrote in a note after the report.
December’s advance in payrolls was led by health care and social assistance, retail trade and leisure and hospitality. Government employment also rose. Manufacturing was a notable weak spot — the sector reduced headcount for the fourth time in five months, bringing total job losses in 2024 to 87,000.
The participation rate — the share of the population that is working or looking for work — was unchanged at 62.5%. Fewer people permanently lost their jobs and more workers left positions voluntarily, while the median duration of unemployment ticked lower.
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Central bankers are paying close attention to how labour supply and demand dynamics are impacting wage gains. Friday’s report showed average hourly earnings increased 3.9% from a year ago. Earnings for nonsupervisory employees, who make up the majority of workers, advanced 0.2% from November and 3.8% from a year earlier, marking the slowest annual pace since mid-2021.
The jobs report is comprised of two surveys — one of businesses and the other of households. The report included revisions to the household survey, which left the overall picture of the labour market largely intact.
What Bloomberg Economics says...
Revisions to the payrolls survey will be released in next month’s report. A preliminary estimate in August suggested job growth in the year through March 2024 would be marked down by the most since 2009.
Though data on weekly filings for unemployment insurance suggest layoffs remained subdued in 2024, several big-name companies including BlackRock Inc. and Tyson Foods Inc. have revealed plans to reduce headcount this year. In 2024, companies announced the fewest hires in almost a decade, according to a report from executive-coaching firm Challenger, Gray & Christmas.
It also remains to be seen how President-elect Donald Trump’s economic agenda — particularly plans for mass deportations and punitive tariffs on imported goods — will impact the labour market.
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