Hiring Surprisingly Surged In December
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Key Takeaways
- The U.S. economy added 256,000 jobs in December, beating expectations for a gain of 155,000.
- The largest job growth since March painted a picture of a healthy labor market.
- The surge in jobs made it less likely that the Federal Reserve would cut its benchmark interest rate anytime soon, as there was less urgency to stoke the economy and protect the job market from mass layoffs.
The job market was supposed to slow down in December; instead, it hit the gas.
U.S. employers added 256,000 jobs in December, up from a revised 212,000 in November, the Bureau of Labor Statistics said Friday. It was the most jobs added in any single month since March and blew past the 155,000 forecasters had expected, according to a survey of economists by Dow Jones Newswires and The Wall Street Journal. The unemployment rate fell to 4.1%, whereas the median forecasters called for it to stay flat at 4.2%.
The solid job growth is a double-edged sword for the health of the economy. On the one hand, it reduces the possibility that employers are on the verge of a wave of layoffs, as some experts have warned. On the other hand, it means borrowing costs could stay higher for longer, as the Federal Reserve has less reason to cut its benchmark interest rate to stoke the economy with easy money and help out the job market.
“The Fed has been less focused on the job market recently and today’s reason gives them more reason to put their attention elsewhere,” Ali Jaffrey, an economist at CIBC, wrote in a commentary.
Investors scaled back their expectations that the Fed will cut rates at any point in 2025. As of Friday morning, financial markets were pricing in a 28% chance the Fed would not cut the fed funds rate at all in 2025, up from nearly 14% the day before, according to the CME Group’s FedWatch tool, which forecasts rate movements based on fed funds futures trading data.