The US economy added more jobs than expected in December, while the unemployment rate unexpectedly fell.
Data from the Bureau of Labor Statistics released on Friday showed 256,000 new jobs were created in December, well above economists’ expectations of 165,000, and up from 212,000 in November. The unemployment rate fell to 4.1% from 4.2% in November. December marked the highest monthly job gain since March 2023.
Wage growth, a key measure of inflationary pressures, rose 0.3% in December, in line with economists’ expectations and lower than the 0.4% in November.
Compared with a year earlier, wages rose 3.9% in December, lower than the 4% in November.
Meanwhile, the labor force participation rate remained steady at 62.5%.
The latest data shows the labor market has tightened but not deteriorated significantly, as layoffs remain low. Data from the Bureau of Labor Statistics released Tuesday showed there were 8.1 million open jobs at the end of November, up from 7.84 million in October and the highest number since May 2023.
However, there were also signs of cooling in the report. The Job Opportunities and Turnover Survey (JOLTS) showed the hiring rate fell to 3.3% from 3.4% in October. The jobless rate, which reflects employee confidence, fell to 1.9% from 2.1% in October.
On Wednesday, data from ADP showed 122,000 private-sector jobs were added in December, down from 146,000 in November.
“The job market is still tight, almost like it’s in a lull,” said ADP Chief Economist Nela Richardson.
Overall, the Federal Reserve has stressed that it is not looking for further cooling in the labor market to achieve its goal of lowering inflation.
“We do not think we need further cooling in the labor market to get inflation down to 2%,” Federal Reserve Chairman Jerome Powell said on December 18.
Ahead of Friday’s jobs report, markets were pricing in just a 5% chance of the Federal Reserve cutting interest rates at its January meeting, according to the CME FedWatch Tool.
