December’s jobs report is likely to provide limited clarity on where the labor market is headed, with experts divided on how pronounced the slowdown in employment will be.
Economists consensus predicts that the Bureau of Labor Statistics will report a 155,000-job increase in nonfarm payrolls on Friday morning, down from November’s surprising 227,000-job gain. This is almost in line with the four-month average. The unemployment rate is expected to remain stable at 4.2%.
However, the details of the report matter, and some on Wall Street expect the number could be a little lower, depending on how seasonal trends and other factors play out. .
“We’re seeing some softening and I think that’s going to continue, but the (labor) market as a whole… remains in good condition.” A staffing agency based in Chicago. “The situation is gradually leveling out. People are still a little cautious and trying to assess this new year and the new economic and political situation.”
On average, the economy added about 180,000 jobs each month in 2024 through November, but recent data has been choppy and somewhat confusing. Federal Reserve President Michelle Bowman said Thursday that measurement challenges such as a surge in new workers and low survey response rates have made labor market reports “increasingly difficult to interpret.” “
The December report could also be difficult to judge, depending on how the hiring of holiday workers affects the numbers.
Goldman Sachs expects payrolls to grow by just 125,000 jobs as the unemployment rate rises to 4.3%.
“Our forecasts reflect a recovery in labor force participation and moderate household employment growth amid a more challenging employment outlook,” the Wall Street bank said in a note. “We expect slower job growth in non-retail sectors this month, particularly in professional services and construction, to more than offset strong retail employment growth.”
Similarly, Citigroup predicts just 120,000 new jobs and an unemployment rate of 4.4%, which economist Andrew Hollenhorst says is “not stable and likely to weaken.” “This should remind the market that it continues to do so. Risks are balanced by the outlook for further softening.”
But Holsten said he believes companies will continue to add headcount, even at a slower pace, once some of the current variables subside. The number of job openings rose to just over 8 million in November, the highest level in six months, but the number of layoffs remained largely unchanged, a measure of worker mobility, according to a report released Tuesday by the Bureau of Labor Statistics. Employee turnover has decreased.
At the Federal Reserve’s December meeting, officials noted “continued gradual easing in the labor market,” but warned against “a rapid deterioration,” according to minutes released Wednesday. I don’t see any signs.”
A recent business survey by LaSalle Network found that 67% of small businesses plan to increase their workforce in 2025, down from 74% the year before. The study also found that salary increases are expected to slow and that hybrid working is likely to remain popular as a wedge to compete with larger companies for employees.
Average hourly wages in December are expected to increase by 0.3% year-on-year and 4% annually, almost unchanged from November.
“At this point, I think it’s going to remain pretty flat overall. There’s not going to be a drastic change one way or the other,” Hellsten said. “But I believe the market is still a good, strong market, and businesses just needed to get through the slightly crazy weather of the past few months and get back to steady state.”
