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The December employment report is likely to provide only limited clarity on where the labor market is headed, with experts differing on how pronounced a slowdown there is in hiring.
From a consensus view, economists expect the Bureau of Labor Statistics on Friday morning to report a gain of 155,000 in nonfarm payrolls, a step down from the a surprising increase of 227,000 in November but roughly in line with the four-month average. The unemployment rate is expected to remain steady at 4.2%.
However, the details of the report will be key, with some on Wall Street expecting the number could come in a bit weaker, depending on how seasonal trends and other factors play out.
“We’ve seen some softening, and I think we’ll continue to see it, but it’s still a good thing [labor] the overall market,” said Maureen Hoersten, chief operating officer and interim CEO at LaSalle Network, a Chicago-based staffing firm. “Things are slowing down a 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 economy in 2024 added about 180,000 jobs in the 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” because of measurement challenges, which included growth in new workers and low interest rates. of responding to surveys.
The December report could also be harder to judge depending on how the hiring of holiday workers affects the numbers.
Goldman Sachs, for one, estimates that wage growth will come in at just 125,000, with the unemployment rate falling to 4.3%.
“Our forecast reflects a recovery in the labor force participation rate and average domestic employment growth amid a more challenging job search outlook,” the Wall Street bank said in a note. “We expect a deceleration in employment growth in non-retail sectors, particularly professional services and construction, to more than offset stronger retail hiring this month.”
Similarly, Citigroup is predicting only 120,000 new jobs and an unemployment rate of 4.4%, which economist Andrew Hollenhorst wrote “should remind the markets that the labor market is not stabilized and continues to clear. The risks are balanced to an even softer reading.”
However, Hoersten said she thinks that once some of the current volatile factors subside, companies will continue to add headcount, albeit gradually. A Bureau of Labor Statistics Report Tuesday put job openings in November at a six-month high of just over 8 million, while layoffs were little changed and the resignation rate, a measure of worker mobility, declined.
At the Federal Reserve’s December meeting, officials noted an “ongoing gradual easing in 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 the number of leaders in 2025, up from 74% the year before. The survey also found that wage increases are expected to be smaller and that hybrid work is likely to prevail as a wedge to compete against larger companies for workers.
Average hourly earnings are expected to see an increase of 0.3% in December and an annual rate of 4% from a year ago, little changed from November.
“Right now, I think things will stay pretty flat overall, nothing drastic one way or the other,” Hoersten said. “But I believe it’s still a good and strong market, and the companies needed to get through a bit of a crazy climate in the last two months and get back to a stable state.”
