In the United States, an unexpected acceleration in job growth was recorded in December.
The unemployment rate in the US last month was fixed at the 4.1% mark. It is worth noting that in November the corresponding figure was 4.2%.
According to media reports, data on the situation in the employment area will reinforce the Federal Reserve’s cautious approach to cutting interest rates in the current year.
Nonfarm payrolls increased by 256,000 jobs in the United States in December after rising by a downwardly revised 212,000 in November. The relevant information was published on Friday, January 10, by the US Labor Department.
It’s worth noting that economists surveyed by the media had predicted an increase in payrolls by 160,000 jobs in the United States in December.
Employment growth in the US has slowed after a sharp increase in interest rates by the Fed in 2022 and 2023 as part of the implementation of measures to combat inflation. At the same time, the local labor market continues to show resilience, being a contributing factor to stimulating the economy. The mentioned state of affairs supports consumer spending via higher wages.
Currently, the pace of the upward dynamic economy of the United States is significantly higher than 1.8%, which officials of the country’s central bank identify as a non-inflationary growth rate.
As for the economic prospects of the US, in the context of the corresponding vision of the future, a kind of increased anxiety has been observed recently. In this case, concerns are implied about the potential consequences of the expected implementation of the intentions of Donald Trump, who won the United States presidential election in November and will return to the White House the current month, to raise tariffs on imported goods and deport millions of undocumented migrants. According to experts, the materialization of the relevant plans, repeatedly declared by Mr. Trump during the election campaign, in particular, may provoke an acceleration of inflation.
The mentioned concerns were evident in the minutes of the December meeting of Fed officials on monetary policy issues published the current week. In this case, the need to take a cautious approach when making decisions about lowering the cost of borrowing was highlighted.
Average hourly earnings in the United States increased by 0.3% in December. In November, the corresponding indicator grew by 0.4%. In the 12 months through December, wages increased by 3.9% after November’s 4% rise.
After Donald Trump’s victory in the presidential election, increased optimism was recorded in the business area related to expectations of tax cuts and a less stringent regulatory environment.
At the same time, most economists polled by the media do not predict a surge in hiring in the near term. It is also worth noting that the results of business surveys indicate that there are no signs that companies are planning to boost head counts.
The United States government has revised the seasonally adjusted household survey data, from which the unemployment rate is derived, for the last five years.
Loosening labor market conditions has been underscored by a steady increase in the number of people who have permanently lost their jobs and the median duration of unemployment from September to an almost three-year high of 10.5 weeks in November.
The results of the Job Openings and Labor Turnover Survey indicate that hiring levels in the United States are currently returning to readings that were observed at the beginning of the coronavirus pandemic.
Last month, the Fed cut its benchmark overnight interest rate by another quarter point to a range of 4.25%-4.5%. Overall, the mentioned indicator has declined by 100 basis points since the central bank of the United States began easing monetary policy in September. This year, the US financial regulator is planning two interest rate cuts. It’s worth noting that in September, the Fed predicted four lowering of borrowing costs in 2025. The change in expectations of the central bank of the United States is related to the endurance of the economy and still elevated inflation. In 2022 and 2023, the policy rate was hiked by 5.25%.
US stock futures showed a sharp drop after the jobs report was published, which exceeded preliminary expectations. Futures on the Dow declined by almost 400 points, but then this indicator rose slightly. The yield on the 10-year Treasury surged to 4.7% as traders fear that robust data and a stronger economy could be the reason that the central bank of the United States would pause its campaign to cut interest rates.
