Once more, as of last month’s report, the US labor market told a complicated story. While job growth did not meet overly hopeful expectations, wage growth nevertheless remained strong. Economists were looking for an increase of only about 55,000 jobs in December. This rosy figure belies the resilience and pain still visible in the employment landscape.
Though the net new jobs added in December was relatively modest, the labor market did show some considerable wage pattern. Gains in pay for those who stayed in their jobs stalled at 4.4% in November. By comparison, the average wage growth of job switchers increased by a wide margin to 6.6%, from 6.3%. While hiring overall has certainly slowed, abundant opportunities are still available. Workers who are able to reskill or upskill into new roles will be competitive for growing opportunities.
The detailed view of December’s job gains showed some significant trends by sectors. The information sector was on top again with 12,000 jobs, followed by the federal government with 11,000 jobs. The construction industry benefitted as well, adding 11,000 of those new jobs. Private-sector employers were responsible for all of the month’s job growth and then some, adding an estimated 41,000 jobs on net.
The other two industries—health care and education—combined to add nearly 39,000 positions. The leisure and hospitality sector gained approximately 24,000 jobs. These gains come on the heels of a net loss of 29,000 jobs reported for November, according to ADP’s National Employment Report.
At the same time, job openings have plummeted, reaching their lowest level since September 2024. By the end of November, there were just 7.15 million jobs. The hiring rate dropped to 3.2%, matching its lowest rate in more than a decade. Despite this stagnation, fewer employees were laid off in November, indicating some stability in job retention.
Nela Richardson, a labor market expert, noted the current state of the job market:
“You’re not seeing a dynamic labor market.” – Nela Richardson
These confusing signals in the job market are symptomatic of larger economic conditions. In November, a record number of workers jumped ship entirely. At the same time, small businesses are just beginning to bounce back from pandemic-related closures. Richardson commented on this trend:
“Small establishments recovered from November job losses with positive end-of-year hiring, even as large employers pulled back.” – Nela Richardson
These advanced spell out a labor market that continues to be strong – yet balancing on the edge of the unknown. The hiring environment overall is changing, as small and medium-sized firms rush to meet new economic realities and large firms are more tentative.