“Despite having inherited the worst economic crisis in decades upon taking office, with unemployment at 6%, we have managed to maintain the lowest unemployment average for any government in the last 50 years,” welcomed Joe Biden (AFP / CHRIS KLEPONIS)
Job creation accelerated again in the United States in December, making it more likely that the American Central Bank (Fed) will pause its rate-cutting policy.
In the last month of 2024, 256,000 additional jobs were created, more than in November (212,000 created).
The November figure has certainly been revised downwards compared to the initial estimate (227,000 jobs) but it remains significantly higher than the October data.
The unemployment rate fell to 4.1% (-0.1 point) in December, according to data published Friday by the Labor Department.
“Despite inheriting the worst economic crisis in decades upon taking office, with unemployment at 6%, we have managed to maintain the lowest unemployment average for any government in the last fifty years at the time of my departure”, welcomed outgoing US President Joe Biden, who is due to leave the White House on January 20.
The markets did not expect such solidity to end the year: analysts were in fact rather counting on 154,000 job creations for December, according to the consensus published by briefing.com, a slowdown compared to November.
“This is a strong end to the year and a promising sign of what the new year should be like,” said Ger Doyle, US manager for ManpowerGroup.
“Employment increased in health, public employment and social assistance. Local commerce also started to rise again after job losses in November,” detailed the ministry in its press release.
In the last quarter, employment initially suffered from the persistent strike at Boeing and the passage of two devastating hurricanes in the south of the country before starting to rise again in November.
A sign that the job market remains very solid, the number of people who have “permanently lost their job” is down over one month, even if it remains stable over one year, also showing a return to normal after two years of particularly positive figures in the wake of the post-Covid economic recovery.
“The December jobs report paints a picture of a strong jobs market. While the Fed has indicated it plans to slow the pace of its rate cuts in 2025, this data increases the likelihood of at least a break”, estimated in a note the chief economist of MBA SVP, Mire Fratantoni.
– Economy still strong –
The Fed in fact monitors employment figures closely, because its missions are to ensure both price stability and full employment.
As long as employment remains solid, it can continue to focus on the fight against inflation, which has still not returned to the hoped-for level of 2%, its long-term objective.
Over the last months of the year, it even tended to rise a little, even though the Fed had begun its cycle of rate cuts, believing that inflation was on the right pace to return to its target.
As a result of this healthy job market, salaries also increased in December, by 0.3% over one month, slower than the previous month however, and in line with market expectations this time.
Over one year, wages increased by an average of 3.9%, which is now higher than the rate of inflation, which reached 2.4% over one year in November, according to the PCE index favored by the Fed.
“Enough to support consumer spending,” said HFE chief economist Carl Weinberg, for whom “there is no need to worry about the solidity of the American economy.”
“Nothing in this data risks pushing the Fed to rush into its rate cuts,” he added.
The main central bank rates are now located in a range between 4.25% and 4.50% and no reduction is expected by the markets at the next meeting, scheduled for the end of January.
Nevertheless, “despite the surprise increase in employment, the Fed will continue to consider that its monetary policy is restrictive”, judged Samuel Tombs, chief economist of Pantheon Macroeconomics.
There is therefore little chance that it will further reduce the number of planned rate cuts, while its president Jerome Powell has opened the door to two new cuts, of 0.25 percentage points each, over 2025.
