The December jobs report will likely provide only limited clarity on where the labor market is heading, with experts differing on how pronounced the hiring slowdown is.
Consensus economists expect the Bureau of Labor Statistics to report a 155,000 increase in nonfarm payrolls on Friday morning, down from a surprising increase of 227,000 in November but approximately at the level of the four-month average. The unemployment rate is forecast to remain stable at 4.2%.
The details of the report will be key, however, and some on Wall Street expect the number could be slightly weaker, depending on the impact of seasonal trends and other factors.
“We've seen some easing, and I think we'll continue to see that, but overall it's a good (job) market,” said Maureen Hoersten, chief operating officer and interim CEO at LaSalle Network, a Chicago-based recruiting firm. “The situation is stabilizing a bit. People are still a bit cautious as they try to understand the new year and the new economic and political climate.”
On average in 2024, the economy has added about 180,000 jobs per month through November, although recent data has been volatile and somewhat unclear. Federal Reserve Governor Michelle Bowman said Thursday that labor market reports are “becoming increasingly difficult to interpret” because of measurement challenges that include a surge in new hires and low survey response rates.
The December report may also be more difficult to assess depending on how summer hiring affects the numbers.
Goldman Sachs, for example, estimates that job growth will be just 125,000 and the unemployment rate will rise to 4.3%.
“Our forecast reflects a rebound in the labor force participation rate and average household employment growth amid a tougher job prospects,” the Wall Street bank said in a note. “We expect the slowdown in non-retail job growth, particularly professional services and construction, to more than offset retail employment growth this month.”
Similarly, Citigroup projects just 120,000 new jobs and an unemployment rate of 4.4%, which, as economist Andrew Hollenhorst wrote, “should remind markets that the labor market has not stabilized and continues to weaken. The risks balance out with an even milder reading.”
Hoersten said, however, that she believes that once some of the current volatile factors subside, companies will continue to add workers, even if at a gradual pace. AND Bureau of Labor Statistics report On Tuesday, the number of job openings in November hit a six-month high of just over 8 million, while layoffs were flat and the attrition rate, a measure of worker mobility, fell.
At the Federal Reserve's December meeting, they said, officials noted “continued gradual easing in labor market conditions” but “did not see any signs of rapid deterioration.” minutes published on Wednesday.
A recent business survey from LaSalle Network found that 67% of small and medium-sized businesses plan to increase their workforce in 2025, up from 74% a year earlier. The study also found that smaller wage increases are expected and hybrid working is likely to remain dominant as a wedge in the competition for workers with larger companies.
Average hourly earnings are expected to increase by 0.3% in December, at an annual rate of 4% compared to a year ago, with little change compared to November.
“Right now, I think overall things will remain pretty flat, with no drastic changes one way or the other,” Hoersten said. “But I think it's still a good, strong market and companies just needed to get over some of the crazy climate over the last few months and get back to a stable state.”