The Employment Situation for January 2025

Editor's Note: This report is based on survey data from December 2024 that was published in January 2025. This is the most recent data available. (Source: Bureau of Labor Statistics)

‍

US employers added about 256 thousand jobs last month, which exceeded economists predictions of about 150 thousand jobs by nearly 79%.

‍

The national unemployment dropping to 4.1% also bet forecasts, which were predicting the national unemployment rate from holding steady at 4.2%.

‍

The number of people who permanently lost their job last month was down significantly from the month prior as well, down from almost 1.9 million people in November prior to 1.7 million as of the latest report.

‍

There wasn’t much change in terms of the number of long-term unemployed and the labor force participation rate, which held steady at 1.6 million and 62.5%, respectively. 

‍

People working part time due to economic reasons (4.4 million) and people who want a job but haven’t looked for one in the last 4 weeks (5.5 million) also was similarly unchanged over the month, as was the 1.6 million people who are categorized as marginally attached to the workforce, meaning they want a job and had looked for one at some point in the past 12 months but had not done so in the past 4 weeks.

‍

Of the net 256 thousand net new payroll entries over the course of December, the healthcare industry was responsible for the largest portion at 46 thousand new jobs, with the retail industry close behind at 45 thousand net new jobs after suffering a net job loss in November’ report.

‍

About 33 thousand and 23 thousand government and social assistance jobs were added last month, as well, while most of the remaining industries saw little change in payroll figures during the month, including leisure & hospitality, natural resource extraction, construction, manufacturing, wholesale trade, information, financial activities, and professional and business services as well as other services. 

‍

Average hourly pay continued rising, this time by about 10 cents to $35.69 per hour (an increase of 0.3%), while the average workweek held steady at 34.3 hours per week. 

‍

Mployer’s Take

This latest employment report marks the second consecutive month of job growth that far outpaces expectations, but those two strong months come on the heels of an especially weak one in October.

‍

Still, given that strikes, natural disasters, and related data collection issues were significantly responsible for the down month, the two latest strong months look all the better by comparison. 

‍

The recent job market strength, however, bolsters the Federal Reserve’s case for delaying additional rate cuts and makes it very unlikely that we’ll see any rate cuts over the next several months, especially in light of uncertainty about whether the incoming Trump administration will follow through with tariffs and if so, how broadly impactful they may be, which the Fed will monitor closely in relation to any inflationary pressure the tariffs may cause. 

‍

While we won’t know much more about how the months and years ahead are primed to play out until power formally changes hands, it’s worth taking a look at some of the milestones from the past year as we wrap up some of the last data points from 2024.

‍

Over the last year, US payrolls have increased by 2.2 million, for an average monthly net job gain of 186 thousand. Unemployment is up three-tenths of a point from a year ago, while average hourly wages are up almost 4%.

‍

Other than comparing last year to 2023, when more than 3 million net jobs were added for an average monthly increase of more than a quarter million, it is hard to look at the 2024 numbers and not be impressed at the strength and resiliency of the labor market and economy generally throughout the year. 

‍

With the new year comes new data, new milestones to mark, and in this case, new policies that will shape the labor market and economy going forward for years to come, but overperformance has become the new normal over the past several years, even when plenty of economists were expecting economic downturn, and overperformance is almost certainly unsustainable in the long run as expectations adjust to correct for previous errors.

‍

We would be lucky to keep up the streak, to be sure, but regardless, we will continue keeping an eye on the labor market and economy as new developments come about. 

‍

Check out the Mployer blog here.

‍