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Nonfarm payrolls for December showed an increase of 256K jobs, a strong beat above the 164K that the market was expecting. 2.2 million jobs were created in 2024, about 186K per month on average. Down from 3.0 million jobs created in 2023.

The October and November revisions combined for a net of -8K jobs lower than previously reported. So the net job creation including revisions came in at 248K.

Private sector was the source of the majority of the job creation, with 223K jobs, while government jobs increased 33K. Health care (+69.5K), leisure & hospitality (+43K), along with retail trade (+43.4K) provided about 70% of the total job creation in the private sector for December.

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The unemployment rate ticked down from 4.2% to 4.1%, still very low by historical standards. The UE rate has been stuck at 4.1% to 4.2% for the past 7 months now. Most of the subcomponents remained little changed for the month. Average hours worked stayed the same, along with labor force participation rate.

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Average hourly earnings increased +0.3% in December, about in line with street expectations. Wages (blue) have grew more than inflation (green) for 7 straight months coming into todays report. We will get the CPI report next week, the street expects +0.2% increase in the December CPI. If results come in line with expectations, then that would make the 8th straight month of wages outpacing inflation. A welcome outcome that hopefully turns into a trend.

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Average wages have grown +3.9% over the last 12 months, roughly consistent with the last 10 months in terms of growth rate. Again, we haven’t gotten the December CPI report yet, but aside from that, wages (blue) have outgained inflation (green) on an annualized basis since May 2023.

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Overall a pretty solid solid jobs report, and somewhat surprising given the miss on the ADP private sector payroll report from Friday. But the big picture remains fairly consistent, with the overall job market remaining in decent shape but slowing. The above chart paints the picture the best, with the percentage gain in job creation over the last 12 months slowing to +1.4%. The lowest since we pulled out of the COVID recession by March 2021.

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