The labor market of USA added 256,000 jobs in December, in a strong showing of growth in late 2024.

The jobless rate fell to 4.1% from 4.2% in November, which may amount to an early sign of a labor market recovery after months of… cooling.

The report beat expectations for just 155,000 jobs in the year December and suggests a healthy labor market despite high interest rates meant to curb inflation.

“The US labor market closed 2024 on an upbeat note,” said Ms Julia Pollackchief economist at ZipRecruiter. “Today’s report suggests that a recovery in the labor market may be starting,” he added.

Strong jobs data gives the Federal Reserve more reason to hold interest rates steady and skip a rate cut ahead of its January meeting.

The report provides a rosy picture of the labor market just days before President-elect Donald Trump enters the White House. Trump spent much of the campaign criticizing the Biden-era economy, though a strong labor market remains one of the president’s legacies Joe Biden.

Biden, in the final jobs report of his presidency, noted that he is “the only administration in history to create jobs every month,” despite inheriting a job market devastated by the pandemic.

Trump’s presidential transition team did not immediately respond to a request for comment.

Indeed, the US economy added about 187,000 jobs per month on average in 2024. This is 25% less than the average monthly job creation in 2023, but higher than the 166,000 jobs per month on average in 2019, another strong year for the labor market.

Overall unemployment levels for 2024 were revised to show improvement, with the highest rate unemployment to just 4.2% this year, a low level that suggests underlying strength in the labor market even as hiring fell.

The report shows that there have also been recent improvements. The jobless rate improved for nearly all demographic groups, but the black jobless rate fell sharply to 6.1 percent from 6.4 percent in November. For white workers, unemployment fell to 3.6% from 3.8% in November. And the number of workers permanently out of work also fell.

December’s job gains were concentrated in some of the same service-related sectors that largely strengthened the labor market last year. Health care led the pack, adding 46,000 jobs, reflecting the demands of an aging population.

Retail employers added about 43,000 jobs after losing jobs in November, in a sign that initial seasonal adjustments related to holiday hiring may have understated job growth.

Government employment increased by 33,000 jobs, reflecting strong public sector cash flow to hire workers. And leisure and hospitality added 43,000 jobs, a much larger gain than the average for 2024.

Hiring in the rest of the economy remained stagnant as higher interest rates continue to weigh on the economy. Industries related to office jobs, as well as manufacturing, have barely declined or lost jobs in 2024.

There are early signs of a recovery in business and professional services, which added 28,000 jobs, a welcome sign for office workers who struggled to find work in 2024.

Wage growth slowed in December, rising 0.3% from a month earlier – giving the Federal Reserve at least one sign that there is less reason to fear that inflation will rise further. Average hourly earnings rose 3.9 percent this year to $35.69 an hour, outpacing the rate of inflation and boosting workers’ pocketbooks.

The employers are hiring at their slowest pace since the peak of the pandemic, matching lows from more than a decade ago, according to separate data released Tuesday by the Labor Department. Jobs have fallen significantly, although they remain higher than before the pandemic, and not as many workers are leaving their jobs, according to data from the same report.

However, layoffs remain low because businesses have enough cash flow to keep workers, despite reluctance to hire. The number of workers filing for unemployment benefits fell to an 11-month low last week, according to data released Thursday by the Labor Department.

“There are tremendous tailwinds behind the economy right now,” said Mr PollakZipRecruiter’s economist. “One is that workers have had two years of positive real wage growth, allowing them to see their purchasing power recover. It also boosts spirit and confidence. And corporate earnings remain quite strong.”

Economists had warned that the strong gain of 227,000 jobs in November may have created an artificially strong picture of the labor market but no one is in a position to know whether the labor market will recover in 2025 because it depends somewhat on the pace of the decline interest rates. which stimulates the economy.

Federal Reserve officials have cut interest rates three times since September, but have scaled back expectations for rate cuts in 2025, signaling they intend to take a more cautious approach, in part because of economic uncertainty surrounding Trump’s policy plans.

Pollack noted that vehicle sales, weighed down by more expensive auto loans, have started to pick up again in recent months. Banks’ willingness to lend and home equity credit balances have also improved, possibly in response to recent interest rate cuts. A continued recovery in some areas of spending “would be a sign that the consumer is reacting to lower interest rates and buying more. And that will boost employment,” Pollak said.

Other economists have a more pessimistic view of the job market in the new year. Trump’s plans for increased border security could lead to a weaker supply of immigrant labor, which has contributed to the economic expansion in recent years, especially as baby boomers have retired. The planned tariffs could also stifle economic growth by raising prices, said Sarah House, senior economist at Wells Fargo.

“To the extent that companies are maybe absorbing some of those higher costs, they’re not going to be in as good a position to hire this year,” House said. “So we’re looking for the overall economy to moderate.”