Employers added 256,000 jobs in December, blowing past economists’ expectations and signaling that the job market remains resilient in the face of still-high borrowing rates and stickier-than-expected inflation.
The economy was expected to add 153,000 jobs last month, according to economists polled by financial-data firm FactSet. The unemployment rate in December stepped down to 4.1%, lower than the forecast that the rate would remain steady at 4.2%.
The Jan. 10 jobs report marks the last monthly employment snapshot of the Biden administration, which inherited an economy scarred by the pandemic. When Biden was inaugurated in January 2021, the jobless rate stood at 6.4%, while inflation was about to soar to 40-year highs, kicking off a flurry of interest rate hikes from the Federal Reserve to tame price increases.
Under the Fed’s restrictive monetary policy, the economy has cooled, dampening inflation but also creating some cracks in the labor market. At the same time, the incoming Trump administration’s policies, if enacted, are expected to be inflationary, prompting some economists to predict that the central bank may hold off on cutting rates at its January 29 meeting.
The robust jobs report may also ease pressure on the Fed to continue to cut rates, given the Fed Chair Jerome Powell had cited some earlier signs of weakness in the labor market as one reason why the central bank began cutting rates in September.
“December’s jobs report delivers a strong finish to 2024 and is a promising sign of what’s to come in the new year,” said Ger Doyle, U.S. country manager at recruiting firm ManpowerGroup, in an email. “However, the labor market may still face challenges until inflation is under more control, which is necessary to prevent slower hiring, layoffs and reduced job growth.”
Hiring was strongest in the health care, government and social assistance industries, the Bureau of Labor Statistics said Friday. Retail companies also added jobs last month, after a decline in November.