US Payrolls Growth Picks Up, Unemployment Rate Drops

Washington: The US economy added a whopping 256,000 jobs in December, the best since March. Plus, the unemployment rate dipped to 4.1%. This news is a big boost for the economy and suggests the Federal Reserve might hold off on cutting interest rates for now.

Most economists were surprised by these numbers. The job growth beat nearly all predictions, and average hourly earnings also went up by 0.3% from November. It’s a good sign that the labor market is holding strong despite some challenges like high borrowing costs and inflation.

Interestingly, while the job market was solid last year, the economy added 2.2 million jobs overall, which is a bit less than the 3 million from 2023. But it’s still better than the 2 million added in 2019, so there’s that!

Now, the Fed is keeping a close eye on inflation, especially since it’s been creeping up lately. They might keep interest rates steady for a while after lowering them by a full percentage point in 2024. The next consumer price data is coming out on January 15, so we’ll see how that goes.

In December, the biggest job gains were in health care, retail, and hospitality. However, manufacturing has been struggling, losing jobs for four out of the last five months. It’s a mixed bag, really.

The participation rate, which shows how many people are working or looking for work, stayed the same at 62.5%. And it’s worth noting that fewer people are losing their jobs permanently, which is a positive trend.

Wage growth is also something the Fed is watching closely. Average hourly earnings rose 3.9% from last year, but that’s the slowest increase since mid-2021. So, while things are looking up, there are still some bumps in the road.

Overall, this jobs report is based on two surveys, and it seems like the labor market is stabilizing after a rough patch in the latter half of 2024. It’s a good sign for the economy moving forward!