Jobs Report: The Labor Market Closed Out 2024 Better than Expected
Jobs Report: The Labor Market Closed Out 2024 Better than Expected
The U.S. labor market ended 2024 with a surprising burst of strength, capping a sluggish two-year stretch with its best performance since the first quarter. Employers added 256,000 jobs in December, according to today’s jobs report, while the unemployment rate ticked down to 4.1%. The gains, which were driven by healthcare and government hiring, also extended into retail and professional services—an encouraging sign of momentum across the economy.
The December surge reflects growing optimism among businesses and consumers alike. After months of weak economic data, a series of interest rate cuts by the Federal Reserve appears to be bearing fruit. Credit is flowing more freely as banks loosen lending standards, home equity borrowing has picked up, and car sales are climbing—a sign that households are regaining confidence to make big-ticket purchases. These trends often take time to filter into the labor market, but December’s jobs report suggests a recovery could be taking hold.
Still, the rebound is fragile. Despite the Fed’s 100-basis-point reduction in interest rates this year, borrowing costs remain elevated in some corners of the economy. Rising bond yields—driven by persistent inflation and concerns over the federal deficit—have offset some of the Fed’s actions, keeping a lid on business investment. As long as the yield on 10-year Treasury bonds stays above 4%, job growth could remain uneven.
The backdrop to these gains is a labor market that struggled for much of the year. Unemployment rose over the course of the year, climbing from 3.7% to 4.1% over the year. The share of prime-age Americans with jobs—long a bright spot in the recovery—stalled at 80.5%, well below its recent peak. Manufacturing remains a weak spot.
Heading into 2025, the labor market faces a mixed outlook. Some of the drags on growth—such as high borrowing costs and weak consumer spending—are beginning to ease. But significant risks remain, from the impact of high bond yields to lingering weakness in key industries. For now, the December report offers a glimmer of hope that the worst of the labor market slowdown may be behind us.
Take a tour through the Jobs report in ZipRecruiter charts.
