The December jobs report will likely provide limited clarity on where the job market is headed, as experts differ on how pronounced the slowdown in hiring is.
Consensus is that economists expect the Bureau of Labor Statistics to report a 155,000 increase in nonfarm payrolls Friday morning, down from November's surprise increase of 227,000 but about level with the four-month average. The unemployment rate is expected to remain stable at 4.2%.
However, the details of the report will be crucial as some on Wall Street expect the number could be slightly weaker depending on how seasonal trends and other factors develop.
“We've seen a little bit of a slowdown, and I think we'll continue to see that, but it's still good.” [labor] market as a whole,” said Maureen Hoersten, chief operating officer and interim CEO at LaSalle Network, a Chicago-based staffing firm. “The situation is calming down a bit. People are still somewhat cautious and trying to understand the new year and the new economic and political climate.”
On average, the economy added about 180,000 jobs each month in 2024 through November, although the data has been volatile and somewhat confusing recently. Federal Reserve Governor Michelle Bowman said Thursday that labor market reports are becoming “increasingly difficult to interpret” because of measurement problems that included a surge in new workers and low survey response rates.
The December report could also be more difficult to assess, depending on how hiring holiday workers affects the numbers.
Goldman Sachs, for example, estimates that job growth will be just 125,000 while the unemployment rate will rise to 4.3%.
“Our forecast reflects a recovery in labor force participation and moderate household employment growth as the job search outlook becomes more difficult,” the Wall Street bank said in a note. “We expect slowing employment growth in non-retail sectors, particularly professional services and construction, to more than offset stronger retail hiring this month.”
Similarly, Citigroup forecasts just 120,000 new jobs and an unemployment rate of 4.4%, which economist Andrew Hollenhorst wrote: “Markets should be reminded that the labor market has not stabilized and continues to weaken. The risks are being weighed towards an even weaker forecast.”
However, Hoersten said she expects that as some of the current volatile factors subside, companies will continue to add staff, albeit slowly. A report from the Bureau of Labor Statistics on Tuesday put the number of job openings in November at just over 8 million, the highest in six months, while layoffs were little changed and the quit rate, a measure of worker mobility, fell.
At the Federal Reserve's December meeting, officials noted “continued gradual easing in labor market conditions” but saw “no signs of rapid deterioration,” according to minutes released Wednesday.
In a recent business survey, LaSalle Network found that 67% of small and medium-sized businesses plan to increase headcount in 2025, compared to 74% the year before. The survey also found that pay increases are expected to be smaller and that hybrid working will likely remain prevalent to compete with larger companies for workers.
December's average hourly wage is expected to show a 0.3% increase and a 4% annual rate from a year ago, representing little change from November.
“Right now I think things are going to stay pretty flat overall, not drastic one way or the other,” Hoersten said. “But I think it's still a good, strong market and companies just needed to get past the somewhat crazy climate of the last few months and get back to a steady state.”
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