Total nonfarm payroll rose by 256,000 in December, and the unemployment rate shrunk slightly to 4.1%, according to the U.S. Bureau of Labor Statistics, potentially indicating optimism for the job market going into 2025, economists said.
But it’s not yet clear whether December’s upward swing indicates returning stability or a one-off jump due to seasonal hiring, Edward Hearn, lead economist at UKG, said in a statement. Additionally, household survey data is revised every month, so any real strength may not be known until next month, Cory Stahle, economist for Indeed Hiring Lab, said in a statement.
Other typical signals of strength are also still slightly weak or in decline. For example, the share of U.S. workers aged 25-54 who are employed continued to decline for the third month in a row. Labor force participation rate stabilized, but only after four months of declines, Hearn said.
Growth was mostly spread between sectors, data indicated, though it was somewhat focused once again in healthcare and government. Leisure and hospitality also saw gains after declines in previous months.
Will the economy reach the predicted “soft landing” in 2025? That may depend in part upon policies put in place by the incoming administration, multiple economists said.
“For now, today’s data are likely to reinforce the Federal Reserve’s confidence that the labor market still has solid momentum and that they have room to wait on interest rate-cutting decisions,” Stahle said.
