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December’s jobs report is likely to provide only limited clarity on where the labor market is headed, with experts divided on how much of the apparent slowdown is in hiring.
In terms of consensus, economists expect the Bureau of Labor Statistics to report a 155,000 increase in nonfarm payrolls on Friday morning, a step below the a surprising increase of 227,000 in November but roughly in line with the four-month average. The unemployment rate is forecast to remain 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 seasonal trends and other factors.
“We’ve seen a little softening, and I think we’ll continue to see that, but overall the (labor) market is still good,” said Maureen Horsten, chief operating officer and interim CEO of LaSalle Network, a Chicago staffing firm. firm. “Things are leveling off a little bit. People are still a little cautious trying to make sense of this new year and the new economic and political climate.”
On average, the economy added about 180,000 jobs in the month to November in 2024, although data has been volatile and somewhat confusing recently. Federal Reserve Governor Michelle Bowman said Thursday that labor market reports are “increasingly difficult to interpret” because of problems with the estimate, which include a surge in new hires and low survey responses.
The December report may also be harder to judge depending on how holiday hiring affects the numbers.
Goldman Sachs, for example, predicts that wage growth will be just 125,000 and the unemployment rate will rise to 4.3%.
“Our forecast reflects a recovery in labor force participation and average household employment growth amid a more challenging job search outlook,” the Wall Street bank said in a note. “We expect a slowdown in non-retail job growth, particularly in professional services and construction, to more than offset the growth in retail hiring this month.”
Likewise, Citigroup forecasts 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. The risks are balanced to an even softer read.”
However, Hursten said that once some of the current headwinds subside, companies will continue to add more employees, even if gradually. A Bureau of Labor Statistics report On Tuesday, the number of job openings in November hit a six-month high of just over 8 million, while layoffs were little changed and the layoff rate, a measure of labor mobility, fell.
At the Federal Reserve’s December meeting, officials noted “continued gradual easing of labor market conditions” but saw “no signs of an imminent deterioration.” minutes released Wednesday.
In a recent business survey, LaSalle Network found that 67% of small and medium-sized companies plan to increase the number of employees in 2025. compared to 74% a year earlier. The survey also found that wage increases are expected to be smaller and hybrid work is likely to remain prevalent as a wedge in the competition with larger companies for workers.
Average hourly earnings are expected to rise 0.3% in December, and the annual rate is expected to be 4% from a year ago, little changed from November.
“Right now I think things will generally stay the same, nothing drastic one way or another,” Hursten said. “But I think it’s still a good, strong market, and companies just needed to get over the slightly crazy climate of the last couple of months and get back to a steady state.”
