U.S. Job Growth Accelerates in December, Unemployment Rate Falls to 4.1%
WASHINGTON (Reuters) – U.S. job growth unexpectedly accelerated in December, with nonfarm payrolls increasing by 256,000, while the unemployment rate fell to 4.1%, according to the Labor Department’s closely watched employment report on Friday. The report showed a decline in the number of people who have permanently lost their jobs and a shortening in the median duration of unemployment, supporting views that the Federal Reserve would keep interest rates unchanged in January.
The upbeat report reinforced the Fed’s cautious stance towards further monetary policy easing this year, amid concerns that President-elect Donald Trump’s policies could stoke inflation. Economists expect rate cuts to be held off until the second half of the year.
The report showed that hiring has slowed in the aftermath of the Fed’s hefty rate hikes in 2022 and 2023, but labor market resilience, driven by historically low layoffs, is supporting consumer spending through higher wages. The economy is expanding at above the 1.8% pace that Fed officials regard as the non-inflationary growth rate.
Job growth last month was broad-based, with payrolls increasing in most industries, including healthcare, retail, leisure and hospitality, and professional and business services. Manufacturing, however, shed 13,000 jobs, mostly in semiconductor and other electronic component manufacturing.
The solid job growth and decent earnings growth are expected to keep the US economic expansion on a sturdy foundation, supporting the Fed’s cautious stance. Financial markets expect the Fed to keep its benchmark interest rate unchanged in January, with only two quarter-point rate cuts projected for the rest of the year.
Average hourly earnings increased 0.3% in December, while wages advanced 3.9% in the 12 months through December. Labor income rose at a seasonally adjusted annualized 5.9% in the fourth quarter, the most since the third quarter of 2023.
