December’s jobs report is likely to provide only limited clarity on where the labor market is headed, and experts differ on how pronounced the hiring slowdown is.
In a consensus view, economists expect the Bureau of Labor Statistics to report a rise of 155,000 in nonfarm payrolls on Friday morning, a step below the a surprising increase from 227,000 in November but roughly in line with the four-month average. The unemployment rate is expected to remain stable at 4.2%.
However, the details of the report will be key, and some on Wall Street expect the number could be slightly weaker, depending on how seasonal trends and other factors play out.
“We’ve seen some softening and I think we’ll continue to see that, but it’s still good [labor] in the overall market,” said Maureen Hoersten, chief operating officer and interim CEO of LaSalle Network, a Chicago-based recruiting firm. “Things are calming down a little bit. People are still a little cautious, trying to figure out this new year and the new economic climate and the political climate.”
On average, the 2024 economy added about 180,000 jobs per month through November, although the data has been volatile and somewhat confusing lately. Federal Reserve Governor Michelle Bowman said Thursday that labor market reports “have become increasingly difficult to interpret” due to measurement challenges, which included a wave of new workers and low survey response rates.
The December report could also be harder to gauge depending on how holiday hiring affects the numbers.
Goldman Sachs, for example, estimates that wage growth will be only 125,000, with the unemployment rate up to 4.3%.
“Our forecast reflects a recovery in the labor force participation rate and moderate growth in household employment amid a more challenging job-finding outlook,” the Wall Street bank said in a note. “We expect the slowdown in non-retail job growth, particularly in professional services and construction, to more than offset stronger retail hiring this month.”
Similarly, Citigroup forecast just 120,000 new jobs and an unemployment rate of 4.4%, which economist Andrew Hollenhorst wrote “should remind markets that the labor market has not stabilized and continues to soften. Risks are balanced to an even softer reading.”
However, Hoersten said she thinks that once some of the current volatile factors recede, companies will continue to increase hiring, even if gradually. AND Report of the Bureau of Labor Statistics On Tuesday, new jobs were created in November at a six-month high of just over 8 million, while layoffs were little changed and the quit rate, a measure of worker mobility, fell.
At the Federal Reserve’s December meeting, officials noted “ongoing gradual easing of labor market conditions” but saw “no signs of rapid deterioration,” according to minutes released on Wednesday.
In a recent business survey, LaSalle Network found that 67% of small and medium-sized companies plan to increase their headcount in 2025, down from 74% the year before. The survey also found that wage increases are expected to be smaller and that hybrid work is likely to remain prevalent as a wedge in the competition with larger companies for workers.
Average hourly wages are expected to show an increase of 0.3% in December and an annual rate of 4% from last year, little changed from November.
“Right now, I think things will generally remain pretty much unchanged, nothing drastic one way or the other,” Hoersten said. “But I believe it’s still a good, strong market and companies just needed to weather a bit of a crazy climate over the past few months and get back to a steady state.”
