U.S. Job Growth Accelerates in December, Supporting Rate Pause
U.S. job growth unexpectedly accelerated in December, with nonfarm payrolls increasing by 256,000, the most since March, according to the Labor Department’s closely watched employment report. The unemployment rate fell to 4.1%, further reinforcing views that the Federal Reserve will keep interest rates unchanged this month.
The report also showed a decline in the number of people who have permanently lost their jobs and a shortening in the median duration of unemployment. The solid job growth and decent earnings growth will keep the U.S. economic expansion on a sturdy foundation, supporting the Fed’s caution towards further monetary policy easing.
Job growth last month extended beyond non-cyclical industries, with even retail payrolls rebounding, though hiring was partially boosted by a late Thanksgiving holiday. Healthcare employment increased by 46,000 positions, spread across home healthcare services, nursing and residential care facilities, and hospitals. Professional and business services payrolls rose by 28,000, while government employment increased by 33,000 positions.
The report was widely seen as a masterclass in labor market resilience, with economists expecting the Fed to keep its benchmark overnight interest rate unchanged in the 4.25%-4.50% range at its January meeting. The central bank has lowered its policy rate by 100 basis points since launching its easing cycle in September, and the economy is expanding at well above the 1.8% pace that Fed officials regard as the non-inflationary growth rate.
