The unemployment rate is a measure of the percentage of the total labor force that is unemployed but actively seeking employment and willing to work. It’s a key indicator of the health of the labor market and the economy. For example, an unemployment rate of 4.2% means that 4.2% of the people who are able and willing to work are currently without a job.
Nonfarm payrolls refer to the total number of paid workers in the U.S. excluding farm employees, government employees, private household employees, and employees of nonprofit organizations. This statistic is reported monthly by the U.S. Bureau of Labor Statistics and is a critical indicator of economic health. An increase in nonfarm payrolls typically signals economic growth, and means more jobs creation.
Employment Situation – December 2024
In December 2024, the U.S. economy added 256,000 nonfarm payroll jobs, while the unemployment rate fell to 4.1%, according to the U.S. Bureau of Labor Statistics. Employment growth was driven by gains in health care, government, and social assistance sectors. Notably, retail trade also saw job increases after experiencing losses in November.
Unemployment Data
The unemployment rate in December 2024 was steady at 4.1%, with 6.9 million unemployed individuals. The rates for different demographic groups were as follows:
- Whites: 3.6%
- Adult Men: 3.7%
- Adult Women: 3.8%
- Teenagers: 12.4%
- Blacks: 6.1%
- Asians: 3.5%
- Hispanics: 5.1%
The number of permanent job losers decreased by 164,000 to 1.7 million, while the number of long-term unemployed (jobless for 27 weeks or more) remained unchanged at 1.6 million.
Image source: tradingeconomics
Labor Force Participation and Employment-Population Ratio
The labor force participation rate was 62.5%, unchanged from the previous month, and the employment-population ratio was 60%.
Part-Time Employment
Approximately 4.4 million people were employed part-time for economic reasons, with little change from the previous year. Additionally, 5.5 million individuals were not in the labor force but expressed a desire for employment, although they had not actively searched for work in the four weeks preceding the survey.
Establishment Survey Data
In December 2024, nonfarm payroll employment rose by 256,000 jobs, with notable increases in the following sectors:
- Health Care: +46,000 jobs
- Retail Trade: +43,000 jobs
- Government: +33,000 jobs
- Social Assistance: +23,000 jobs
Overall, payroll employment increased by 2.2 million in 2024, averaging a monthly gain of 186,000 jobs, compared to an average monthly gain of 251,000 jobs in 2023.
Earnings and Workweek
Average hourly earnings for all employees on private nonfarm payrolls increased by 10 cents, or 0.3%, to $35.69 in December. Over the past year, average hourly earnings have increased by 3.9%. The average workweek for all employees remained steady at 34.3 hours for the fifth consecutive month.
Impacts of Report on Stock Market
The December 2024 job report, which showed the addition of 256,000 jobs and an unemployment rate of 4.1%, had an impact on the stock market. The S&P 500 saw a slight decline. This reaction was likely due to investors adjusting their expectations for interest rate cuts by the Federal Reserve.
The strong job numbers indicated a robust labor market, which could lead the Federal Reserve to maintain higher interest rates for a longer period to manage inflation. The report’s strong job growth figures pushed out investor bets on when the Federal Reserve might cut interest rates, with traders now seeing less than a 50% chance of a rate cut until June.
