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Key takeaways

  • The U.S. economy added 256,000 jobs in December 2024, surpassing expectations and marking the largest increase since March 2024. November 2024’s job gains were revised down by 15,000 to 212,000, while October 2024’s were revised up by 7,000 to 43,000.
  • The unemployment rate unexpectedly ticked down to 4.1% from 4.2%, highlighting the economy’s resilience.
  • Notably, wage growth does not appear to be re-accelerating. Year-over-year wage growth for the private sector came in at 3.9%, roughly where it has been for three consecutive months.
  • Elyse Ausenbaugh, our Head of Investment Strategy, views the jobs report as confirmation that “this is a strong economy that doesn’t currently need meaningful additional policy easing to see its expansion persist.”
  • For investors, portfolio resiliency is key. Our strategists still expect equity upside driven by strong earnings growth and see potential in go-anywhere, actively managed fixed income strategies that may capitalize on global opportunities.

Contributors

Cristina Dwyer

Analyst, J.P. Morgan Wealth Management

The December 2024 jobs report delivered a strong finish to the year. The U.S. economy added 256,000 jobs in December, sharply beating expectations for 153,000 and marking the largest increase since March 2024.1

November 2024’s job gains were revised down by 15,000 to 212,000, while October 2024’s gains were revised up by 7,000 to 43,000, bringing the three month average payroll growth to just over 170,000.2

Additionally, the unemployment rate ticked down to 4.1% from 4.2%, highlighting the economy’s resilience.

This chart shows the monthly nonfarm payroll employment change in thousands from July 2023 to December 2024.

Immediately following the release, markets moved hawkishly. Equities declined steeply while Treasury yields and the U.S. dollar rose. There is now just over one Federal Reserve (Fed) rate cut priced for 2025, compared to just under two cuts priced prior to the December jobs report release.

What could this report mean for investors?

For investors, portfolio resiliency is key. Our strategists still expect equity upside driven by strong earnings growth and see potential in go-anywhere, actively managed fixed income strategies that may capitalize on global opportunities.

A deeper look: Industry breakdown

In December, the surge in nonfarm payrolls was primarily driven by growth in the health care, social assistance and government sectors. The health care industry  added 46,000 jobs, while social assistance employment increased by 18,000 and government employment increased by 23,000.3

Retail employment made a notable comeback, rebounding by 43,000 after a 29,000 decline in November, a fluctuation attributed to a change in the seasonal pattern of retail hiring. Employment in leisure and hospitality also posted strong gains, up by 43,000.4

Outside of these sectors, employment was little changed, with construction and manufacturing jobs growth posting slight losses.5

Household survey results came in strong

The household survey, which measures the unemployment rate, also paints a robust picture of the labor market. The unemployment rate unexpectedly fell to 4.1% in December from 4.2% in November. The number of unemployed people remained little changed at 6.2 million.6

The labor force participation rate, which indicates the percentage of working-age individuals who are employed or actively seeking work, remained unchanged at 62.5%.

Further bolstering the survey’s positive outlook:

  • The broader U6 measure of unemployment (which includes individuals who are unemployed, discouraged or underemployed) fell by 0.2% points to 7.5%.
  • The working-age employment-population ratio stabilized after two consecutive months of decline.
  • The average duration of unemployment stabilized after five consecutive months of increases.7

Wage growth does not appear to be re-accelerating

Notably, wage growth does not appear to be re-accelerating. Year-over-year (YoY) wage growth for the private sector came in at 3.9%, roughly where it has been for three consecutive months. In addition, average hourly earnings for nonsupervisory employees increased by a slower 0.2% month-over-month and 3.8% YoY, the lowest YoY rate since 2021.8

All in all, this data is more consistent with our strategists’ call for a stabilization of labor market conditions, rather than a re-tightening of labor market slack.

What could this report mean for the Fed?

This jobs report follows the December Federal Open Market Committee (FOMC) meeting, in which the Fed cut interest rates by 25 basis points to support economic growth and suggested a slower pace of future rate cuts in 2025 than previously anticipated.9

Elyse Ausenbaugh, Head of Investment Strategy for J.P. Morgan Wealth Management, believes the employment data “suggests we shouldn’t expect to see another rate cut coming out of the next few FOMC meetings.” She notes, “The jobs report underscored that this is a strong economy that doesn’t currently need meaningful additional policy easing to see its expansion persist.”

References

1.

Bureau of Labor Statistics (BLS), “The Employment Situation – December 2024.”

2.

Ibid.

3.

Ibid.

4.

Ibid.

5.

Ibid.

6.

Ibid.

7.

Ibid.

8.

Ibid.

9.

Federal Reserve, “Federal Reserve issues FOMC statement.”

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