Strong December job growth points to fewer Fed interest-rate cuts
Employers added 256,000 jobs in December, beating economists’ expectations and showing the job market remains resilient amid still higher borrowing rates and higher-than-expected inflation.
The economy was expected to have added 153,000 jobs last month, according to a survey of economists by financial data firm FactSet. The unemployment rate fell to 4.1% in December, stabilizing at 4.2% below expectations.
The Jan. 10 jobs report marks the last monthly employment overview from the Biden administration, which inherits an economy scarred by the pandemic. When Biden took office in January 2021, the unemployment rate was 6.4% and inflation was about to surge to a 40-year high, triggering a series of interest rate hikes by the Federal Reserve to curb rising prices.
The economy has cooled under the Federal Reserve’s restrictive monetary policies, which has curbed inflation but also created some cracks in the labor market. Meanwhile, the incoming Trump administration’s policies are expected to stoke inflation if implemented, prompting some economists to predict the central bank may delay a rate cut at its Jan. 29 meeting.
Fed cuts interest rates more modestly
A strong jobs report could also ease pressure on the Federal Reserve to continue cutting interest rates, as Chairman Jerome Powell has cited some earlier signs of weakness in the labor market as one of the reasons for the Fed to begin cutting rates. cut interest rates September.
Nancy Vanden Houten, chief U.S. economist at Oxford Economics, said in a note that “a strong December jobs report will reinforce the Fed’s intention to slow the pace of interest rate cuts signaled at its December meeting.” “Officials are committed to lowering inflation. “Somewhat disappointed with the mixed pace of progress, these data should ease concerns that keeping rates on hold will pose significant risks to the labor market.”
Hiring is strongest in the health care, government and social assistance industries, the U.S. Bureau of Labor Statistics said Friday. Retail companies also added jobs last month after losing jobs in November.
