The Bureau of Labor Statistics (BLS) released the latest US Employment Situation report on January 9, revealing two significant downside surprises regarding job growth and the unemployment rate. Taken together, these findings point toward a much weaker US economy—one where the economy actually lost 50,000 jobs in December. This is a very far cry from the Bloomberg median estimate of 70,000. The report announced a revision downwards for the month before, adding on another 76,000 job losses.
Jobs growth disappointed badly. The unemployment rate was very positive, edging down to 4.4% in December, a decrease from 4.5% last month. Unemployment rate fell more than anticipated. This occurred even with a really rocky performance on jobs creation, widely expected to be stronger in light of the low growth aspirations for this time.
Over December, employment growth was a meek 49,000 jobs per month. This would be a marked decline from last year’s average of 168,000 jobs added per month in 2024. Collateral to the report’s disappointing results are continuing cracks in the tight labor market, an omen of continuing loss of economic steam as we look toward 2025.
Alvin Liew, an economist at UOB Group, offered a slightly more optimistic take on the downstream effects of the report. He stated, “The Dec payroll report provided two downside surprises as US reported just 50,000 jobs gained (well missing Bloomberg median estimate of 70,000) while prior month revisions saw a further 76,000 declines.”
In addition, wage growth continues to be encouraging even in the face of these lackluster job numbers. Month-over-month wage growth increased 0.3% and year-over-year wage growth increased to 3.8%. It’s a return to more robust monthly increases, compared with November’s 0.2% MOM and 3.6% YOY wage growth.
The mixed signals from the report point to an increasingly complicated economic landscape for policymakers at every level. Liew remarked on this complexity by stating, “The Dec jobs report maintained the bias towards further rate cuts but not necessarily for the immediate future.”
Analysts and economists are still analyzing the data in exhaustive detail. What remains to be seen is what these new employment numbers will mean for monetary policy decisions in the coming months. Wage growth and job creation don’t appear to be on the same track. That should sap confidence in the economy’s overall health and point it toward a more negative trajectory as the US hurtles toward 2025.