U.S. employers added a surprisingly strong 256,000 jobs in December, but hopes that the Federal Reserve will cut interest rates anytime soon are fading.
The explosive numbers released by the U.S. Bureau of Labor Statistics were a sharp increase from the previous month as employment recovered from strikes and major hurricanes, and lifted traders' expectations that the central bank would cut interest rates from the previous consensus in June or July. It was pushed down in October. According to Bloomberg.
Economists polled by FactSet expected payrolls to rise by 153,000 jobs, down from November's 227,000 rise, which was revised downward to 212,000 on Friday.
The unemployment rate fell from 4.2% to 4.1%, but was higher than the unemployment rate of 3.8% in the same period last year. The number of unemployed Americans decreased slightly in December to 6.9 million.
Stock prices fell after the employment report, with S&P 500 futures down about 0.8%. Meanwhile, the 10-year Treasury yield rose, rising 0.1 percentage point this week.
“Friday's jobs report showed a very strong employment end to 2024, as the labor market has not been adversely affected by nearly three years of rising interest rates. It confirms our view,” said Chief Investment Officer Paul Stanley. Granite Bay Wealth Management said in a memo.
“The Federal Reserve can afford to be patient until 2025.”
Over the past few months, the Federal Reserve has turned its attention to the unemployment rate as it considers interest rate cuts as inflation has shown signs of slowing.
But the exact opposite appears to be true now, as the Fed has cut interest rates by as much as a percentage point in three months. Although unemployment has stabilized, inflation appears to have hit a wall.
The number of people who have been unemployed for 27 weeks or more is little changed at 1.6 million, but this is an increase of 278,000 from the previous year.
Average hourly wages for nonfarm employees increased 10 cents, or 0.3%, to $35.69.
The retail industry added 43,000 jobs in December as employers hired seasonal workers to cope with a surge in holiday sales.
