Total nonfarm payroll employment increased by 256,000 in December while the unemployment rate for the month was 4.1%, according to the U.S. Bureau of Labor Statistics (BLS).
According to the BLS, the unemployment rate has been either 4.1% or 4.2% for the past seven months while the number of unemployed people was little changed at 6.9 million in December.
Zonda chief economist Ali Wolf says in the short-term, the strong labor report should cause the Fed to delay rate cuts in 2025.
“The Federal Reserve was already signaling a slowdown for rate cuts given firmer inflation and a solid economic backdrop, and the blockbuster report will only solidify that,” says Wolf.
In addition to the preliminary December figures, the changes in nonfarm payroll employment were revised for both October and November. The October figure was revised upwards to 43,000 jobs added from 36,000 while the November figure was revised downward to 212,000 jobs added from 227,000.
For the construction industry, an analysis by the Associated Builders and Contractors (ABC) indicated the sector added just 8,000 jobs on net in December and 196,000 jobs for the full calendar year. The construction industry unemployment rate in December was 5.2%
“Construction job growth has clearly slowed in recent months,” ABC chief economist Anirban Basu says. “The 15,000 jobs added during the fourth quarter of 2024 represent the fewest over any three-month period since the middle of 2021. While industry-wide job growth is still significantly faster than economy-wide hiring over the past year, the interest rate implications of these data represent a greater concern for contractors.”
In December, employment growth was positive in health care (+46,000 jobs), government (+33,000 jobs), and social assistance (+23,000 jobs). Retail trade job growth was also positive in December, adding 43,000 jobs following a loss of 29,000 jobs in November.
The labor force participation rate in December was 62.5%, unchanged from the prior month. The participation rate remained within a narrow range of 62.5% and 62.7% for the entirety of 2024. The employment-population ratio was 60.0% in December, relatively unchanged from the prior month and over the calendar year.
“Housing participants should celebrate that a strong labor market can support housing demand, but don’t hold your breath for lower mortgage rates anytime soon,” says Wolf.
The number of long-term unemployed—those jobless for 27 weeks or more—was little changed at 1.6 million in December. The count, however, is 278,000 higher than December 2023 levels. The long-term unemployed accounted for 22.4% of all unemployed people in December. The number of people not in the labor force who currently want a job was 5.5 million in December.
“In recent months, there had been increases in the share of workers who were unemployed for longer spells. Although other data continue to report that hiring rates remained quite low, in December, the number of long-term unemployed individuals decreased,” says Mike Fratantoni, senior vice president and chief economist of the Mortgage Bankers Association (MBA).
In December, the average hourly earnings for all employees on private nonfarm payrolls rose by 0.3% to $35.69. Over the past 12 months, average hourly earnings increased by 3.9%.
“The December employment report is a picture of a strong job market. While the Federal Reserve Open Market Committee had indicated that they could slow the pace of rate cuts as we enter 2025, these data make at least a pause in cuts much more likely, which will push mortgage rates higher in the near term,” Fratantoni says.
