The December jobs report is likely to provide limited clarity on where the labor market is headed, with experts disagreeing on how pronounced the slowdown in hiring is.
In a consensus view, economists expect the Bureau of Labor Statistics to report Friday morning an increase of 155,000 nonfarm payrolls, a decline from the previous reading. A surprise increase of 227,000 in November But in line with the four-month average. The unemployment rate is expected to stabilize at 4.2%.
However, the details of the report will be key, as some on Wall Street expect the number to come in a bit weaker, depending on how seasonal trends develop and other factors.
“We've seen a little bit of a pullback, and I think we'll continue to see that, but it's still a good (job) market overall,” said Maureen Horsten, chief operating officer and interim CEO at LaSalle Network. Chicago based staffing company. “Things are stabilizing a little bit. People are still a little bit cautious, trying to understand this new year and the new economic climate and the new political climate.”
On average, in 2024 the economy added about 180,000 jobs per month through November, although data has been somewhat volatile and confusing of late. Federal Reserve Governor Michelle Bowman said Thursday that labor market reports have “become increasingly difficult to interpret” because of measurement challenges, which have included an increase in the number of new workers and lower response rates to surveys.
The December report may also be difficult to judge depending on how hiring of holiday workers affects the numbers.
Goldman Sachs, for example, estimates that payroll growth will reach just 125,000 jobs, with the unemployment rate rising to 4.3%.
“Our forecasts reflect a recovery in the labor force participation rate and moderate growth in household employment amid a more difficult outlook for finding jobs,” the Wall Street bank said in a note. “We expect slower job growth in non-retail sectors, especially professional services and construction, to offset stronger retail hiring this month.”
Likewise, Citigroup expects just 120,000 new jobs and an unemployment rate of 4.4%, which economist Andrew Hollenhorst “should remind markets that the labor market has not stabilized and continues to decline. The risks are balanced out by a softer reading.”
However, Horstein said she believes that once some of the current volatile factors subside, companies will continue to add headcount, even if at a gradual rate. A Bureau of Labor Statistics report Tuesday put November job openings 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 Fed's December meeting, officials cited “a continued gradual easing in labor market conditions,” but saw “no signs of rapid deterioration,” according to Business Insider. Minutes issued on Wednesday.
In a recent business survey, the LaSalle Network found that 67% of small and midsize businesses plan to increase headcount in 2025, down from 74% the previous year. The survey also found that salary increases are expected to be smaller and hybrid work is likely to remain prevalent as a wedge to compete with larger companies for workers.
Average hourly earnings are expected to show a 0.3% increase in December and an annual rate of 4% compared to last year, little changed from November.
“Right now, I think things will stay fairly steady overall, and nothing will be drastic one way or another,” Horstein said. “But I think it's still a good, strong market, and companies just need to get through a little bit of the crazy climate over the last couple of months and get back to a steady state.”
