US Job Growth Expected to Slow in December as Unemployment Rate Holds Steady

Economists are predicting that the US may add fewer jobs in December compared to November, according to the upcoming official monthly jobs report scheduled for release by the Bureau of Labor Statistics at 8:30 a.m. ET.

Overview of Expectations: Analysts believe December’s job report will represent “the first clean monthly employment report after October,” as noted by Ed Yardeni and Eric Wallerstein in their latest economic analysis. October’s data was impacted by hurricanes and strikes, while November saw job numbers inflated by the return of previously absent workers.

On top of the employment report, December’s unemployment rate and the annual report on hourly wages will also be released at 8:30 a.m. ET. Additionally, preliminary consumer sentiment data for January will come out at 10:00 a.m. ET.

According to a consensus compiled by TradingEconomics, the nonfarm payrolls are anticipated to show an increase of 154,000 jobs in December, a notable decrease from the 227,000 jobs added in November. Meanwhile, Bloomberg's estimate is slightly higher at 165,000 new jobs.

Joseph Brusuelas, the chief economist at RSM US, forecasts that 180,000 new jobs will be created in December, with the unemployment rate remaining at 4.2%.

Comparing predictions, Bloomberg's consensus stands at 165,000 job additions, while the top ten ranked forecasters average 167,000 new jobs anticipated in December. Brusuelas emphasizes a risk of a stronger-than-expected report due to seasonal employment patterns as he estimates a 180,000 net change in total employment alongside a 4.2% unemployment rate. He also expects average hourly wages to rise by 0.3% month-over-month.

Yardeni Research suggests that, assuming a typical December without disruptions, the report may show payroll gains between 175,000 and 200,000, indicating a potential record high for employment. They predict an average gain of about 200,000 jobs per month by January.

The unemployment rate is expected to remain unchanged at 4.2%, with average hourly earnings likely increasing by 0.3% from the previous month.

Looking ahead, some economists predict potential increases in hiring driven by new policies following the recent elections, which may include deregulations and adjustments to corporate taxes.

Implications for the Market: Alessandro S., a global market strategist, emphasizes that the Federal Reserve has dual responsibilities to promote maximum employment while maintaining stable prices. This means their focus extends beyond controlling inflation to fostering job creation and overall economic growth.

A jobs report that underperforms expectations could lead to a boost in U.S. stocks, a weakening of the dollar, and a decrease in government bond yields. Investors might interpret this as a sign that the Federal Reserve could have more flexibility to ease monetary policy.

On the contrary, a jobs report indicating stronger-than-expected growth or a dip in the unemployment rate could spark concerns surrounding the robustness of the labor market, which may delay any easing from the Fed.

In the market, stock trading was mixed on Wednesday amid a shortened trading week. Treasury yields have seen recent spikes, with 10-year yields rising to 4.73% during Wednesday’s session, marking the highest level since April 2024. Additionally, 30-year yields approached a significant 5% threshold. The impending jobs report is now a focal point for market watchers.

employment, economy, jobs