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Written by Lucia Mutikani
WASHINGTON (Reuters) – U.S. job growth is likely to have slipped to a healthy fraction in December as the unemployment rate remained steady at 4.2%, underscoring the Federal Reserve’s cautious approach to easing. of profit this year.
The closely watched employment report from the Labor Department on Friday will likely not be overshadowed by the weather and strikes that were prevalent in October and November.
The labor market will be ending the year on a strong note, despite growing fears that President-elect Donald Trump’s pledge to impose or raise tariffs on imports and deport millions of immigrants undocumented can lower the rate.
Those concerns were highlighted in the minutes of the US central bank’s Dec. 17-18 published on Wednesday, which noted “many participants said that … the Committee may take a cautious approach” to further cuts.
“The labor market is not as tight as it was coming out of this pandemic, but it’s still as strong as any historically,” said Sevin Yeltekin, a senior economist and professor at the School of Business. Simon’s at the University of Rochester. “If we can avoid massive tariff increases and immigration policies that put companies that rely on skilled and seasonal talent, businesses will continue to create jobs.”
Jobless earnings likely rose by 160,000 jobs last month after rising to more than 227,000 in November, a rebound after being hit hard by the hurricane and disruption from strikes, a Reuters poll of economists said. it showed. Estimates ranged from 120,000 to 200,000 jobs added.
Excluding updates to the October and November payrolls numbers, this would mean that the economy added 2.144 million jobs in the last year of President Joe Biden’s term, which equates to 179,000 positions per month. About 3 million jobs are created by 2023.
The strength of the labor market, especially reflecting the low recession in the past, has strengthened the economy by supporting consumer spending with higher wages. Average hourly earnings are expected to rise 0.3% after gaining 0.4% in November. Annual wage growth was seen unchanged at 4.0% in December.
Hiring has fallen sharply after the central bank raised rates in 2022 and 2023. The economy is growing above the 1.8% pace that Fed officials consider a sustainable growth rate. .
NO BUMP SELECTIONS ACCEPTED
Job gains last month were likely to be concentrated in non-aligned industries such as health care and government, a trend that held for most of 2024. Although business sentiment rose after Trump’s Nov. 5 victory hoping for tax cuts and fewer cuts. regulatory environment, economists do not expect an increase in hiring.
There have also been no signs in business surveys that companies plan to increase headcount.
“While some uncertainty has eased, tariffs and immigration policy are the main unknowns,” said Andrew Husby, chief economist at BNP Paribas (OTC:) Securities. “After the 2016 election, there is nothing clear about net hiring until after the big tax cut legislation passes Congress.”
Despite the potential, potential red flags are lurking. The unemployment rate continues to rise, rising to 4.246% in November, down from 4.2%. In October it went up to 4.145%, down to 4.1%.
Ernie Tedeschi, director of economics at The Budget Lab at Yale, said: “Circular data is understating the recent increase in the unemployment rate.” “The unemployment rate is now less than one hundredth of its July 2024 level. The closing of October and November … means that the risks surrounding the unemployment rate in December are largely diverted to rather than being symmetric.”
The increase in the unemployment rate to 4.3% in July from a five-year low of 3.4% in April 2023, was the key for the Fed to start its policy policy with a large rate of unusual half a percent in September. It followed quarterly rate cuts in November and December, leaving its overnight rate in the 4.25%-4.50% range.
Last month, the Fed planned to cut rates for just two quarters this year compared to the four it had predicted in September. The policy rate rose by 5.25 percent in 2022 and 2023.
“As things stand, Fed officials seem to have reached a point of uncertainty in the labor market,” said Stephen Stanley, chief US economist at Santander (BME:) US Capital Markets.
The government will review seasonally adjusted household survey data, from which the unemployment rate is derived, for the past five years. Economists expect little or no impact on the unemployment rate.
The softening conditions in the labor market are highlighted by the steady rise in the number of people who have lost their jobs permanently, as well as the average period of unemployment since September to more than three weeks. 10.5 in November. That’s consistent with the Open Openings and Labor Turnover Survey, which shows the hiring rate dropping to levels seen at the start of the pandemic.
“So far, the increase in permanent job losses and the period of unemployment is not affected much due to the low speed of reductions, and and and / or the second trend needs to be monitored, Nancy Vanden Houten, a leading US economist at Oxford Economics.
