November's hiring rate of 3.3% is the lowest since the early 2010s when the US was struggling after the Great Recession
The U.S. labor market showed strength in December, with nonfarm payrolls rising by 256,000, the highest monthly increase since March, according to the Bureau of Labor Statistics.
The unemployment rate unexpectedly dropped to 4.1%, while average hourly earnings grew by 0.3% compared to November. These figures align with Federal Reserve officials' recent decisions to maintain interest rates, as reported by BNN Bloomberg.
Despite challenges such as high borrowing costs and persistent inflation, the December report capped a robust year for the labor market. The U.S. economy added 2.2 million jobs in 2024, fewer than the 3 million added in 2023 but surpassing the 2 million created in 2019.
Annual unemployment rate revisions showed the labor market was more resilient during the summer than initially thought, with July's peak rate adjusted downward from 4.3%. These revisions contributed to the Federal Reserve implementing a full percentage point of rate cuts later in the year.
Brian Rose, senior U.S. economist at UBS Global Wealth Management, commented, "Given the overall strength of recent economic data, there is little reason for the Fed to consider cutting rates anytime soon. Softer data on both the labor market and inflation will be needed in the months ahead."
Job gains were led by sectors such as healthcare, social assistance, retail trade, and leisure and hospitality, reflecting continued employment growth. Government employment also rose, while manufacturing declined, with the sector losing 87,000 jobs over the year, including reductions in four of the last five months. The labor force participation rate held steady at 62.5%.
Despite these positive indicators, inflation remains a concern. A separate University of Michigan survey showed consumer expectations for long-term inflation have climbed to their highest level since 2008.
Average hourly earnings increased 3.9% year-over-year, with nonsupervisory employees seeing a 3.8% annual increase—the slowest growth since mid-2021.