In December, the U.S. labor market experienced a significant boost as nonfarm payrolls surged by 256,000, far surpassing the forecasted 155,000 from Dow Jones consensus. This robust job growth contributed to the unemployment rate edging down to 4.1%, which was one-tenth of a point below expectations. Despite the positive news on employment, stock market futures turned negative following the report's release, while Treasury yields saw a notable increase.
Average hourly earnings rose by 0.3% for the month, leading to a 12-month gain of 3.9%, slightly below initial projections. The average work week remained steady at 34.3 hours. Revisions for prior months were less substantial than recent trends, indicating steadier job growth than anticipated. For the entire year, payrolls grew by 2.2 million, marking a decrease from the 3 million gain recorded in 2023.
An alternative measure of unemployment, which includes discouraged workers and those in part-time positions for economic reasons, also showed improvement, dropping to 7.5%. This marks a 0.2 percentage point decline and represents the lowest figure since June 2024.
The considerable job growth in December highlights the resilience of the labor market despite various economic challenges. However, the decrease in full-year payroll growth suggests a slowdown compared to previous years. Analysts from various sectors will likely examine these figures closely to assess the potential implications for future economic policy and labor market trends.