WASHINGTON – The United States job market showed unexpected strength in December as employers added a robust 256,000 jobs, a clear sign of the economy’s resilience despite high interest rates.
According to the Labor Department’s report released on Friday, job growth rose by 212,000 last month, surpassing expectations of around 155,000 new jobs and a 4.2% unemployment rate. This is a positive trend compared to the previous year, where the economy added 2.2 million jobs, although it is slightly lower than the record 6.4 million jobs added in 2021 as the country recovered from massive pandemic-related layoffs.
The job numbers were boosted by strong hiring in the healthcare sector, with 46,000 jobs added, as well as the retail industry with 43,000 jobs, and government agencies at the federal, state, and local levels with 33,000 jobs. However, the manufacturing sector saw a decrease of 13,000 jobs.
The Labor Department also revised the October and November payroll numbers, which showed a decrease of 8,000 jobs. Despite this, average hourly wages rose by 0.3% from November and 3.9% from the previous year, slightly lower than economists’ forecast.
The positive job report has led to a decline in stock prices on Friday morning, as it is expected to make the Federal Reserve less likely to cut interest rates. This is a clear indication of the strength of the economy, with Brian Coulton, chief economist at Fitch Ratings, stating, “It seems pretty certain that the pace of Fed rate cuts is now going to slow down.”
The job market in the United States has been resilient in the past few years, despite challenges such as high inflation and rising interest rates. The Fed raised its benchmark interest rate 11 times in 2022 and 2023 in response to high inflation, but this did not lead to a recession. Instead, the economy continued to grow, with a robust annual GDP growth rate of 3% or more in four of the last five quarters.
Furthermore, layoffs are currently running below the pre-pandemic trend, with the Labor Department reporting the fewest number of people applying for unemployment benefits in nearly a year. Inflation has also decreased from a peak of 9.1% in June 2022 to 2.7% in November, giving the Fed enough confidence to cut interest rates three times in the last four months of 2024.
However, at their December meeting, Fed officials signaled a more cautious approach towards rate cuts this year, projecting only two rate reductions in 2025 compared to the four they had previously envisioned in September. This is due to the recent stall in progress against inflation, which remains above the Fed’s target of 2%.
Overall, the job market in the United States has shown remarkable resilience in the face of challenges, and the economy continues to grow at a steady pace. With unemployment rates remaining low and inflation under control, the Fed’s decision to slow down the pace of rate cuts is a positive sign for the future of the economy. The strong job report for December is a clear indication of the country’s economic strength and provides hope for continued growth in the coming year.
