Michelle Thompson- Economists predict that the Bureau of Labor Statistics will report an increase of 155,000 in nonfarm payrolls for December, a decline from the unexpected 227,000 rise in November.
- The details of the report will be important, as some Wall Street analysts anticipate the actual number could be slightly below the consensus.
- Goldman Sachs, for instance, forecasts a payroll growth of only 125,000, with the unemployment rate edging up to 4.3%.
The December jobs report is expected to provide limited insight into the future of the labor market, as experts have varying opinions on the extent of the slowdown in hiring.
Economists anticipate that the Bureau of Labor Statistics will report a gain of 155,000 nonfarm payrolls for December, a decrease from the surprising 227,000 increase in November, but in line with the four-month average. The unemployment rate is expected to remain steady at 4.2%.
However, the specifics of the report will be important, as some analysts predict the numbers may come in slightly lower, influenced by seasonal trends and other factors.
Maureen Hoersten, COO and interim CEO at LaSalle Network, noted that while there has been some softening, the overall labor market remains strong. She mentioned that businesses are still cautious as they navigate the new year, economic climate, and political landscape.
For 2024, the economy added an average of 180,000 jobs per month through November, although recent data has been volatile. Federal Reserve Governor Michelle Bowman acknowledged the challenges in interpreting labor market reports due to measurement issues, including a surge in new workers and low survey response rates.
The impact of holiday hiring could make the December numbers more difficult to interpret as well.
Goldman Sachs projects payroll growth of only 125,000, with the unemployment rate rising to 4.3%. They predict a slowdown in job growth in non-retail sectors, especially professional services and construction, despite stronger retail hiring in December.
Citigroup’s forecast is even lower, with an estimated 120,000 new jobs and a 4.4% unemployment rate. Economist Andrew Hollenhorst noted that this suggests the labor market is still softening, with risks leaning toward an even weaker report.
Despite these predictions, Hoersten remains optimistic, suggesting that once current volatility subsides, companies will continue to hire, though at a slower pace. A recent report from the Bureau of Labor Statistics showed job openings at a six-month high, with minimal changes in layoffs and a drop in the quits rate.
At the Federal Reserve’s December meeting, officials noted gradual easing in labor market conditions but found no signs of significant deterioration.
A LaSalle Network survey indicated that 67% of small and midsize businesses plan to increase their workforce in 2025, down from 74% in 2024. The survey also found that salary increases are expected to be smaller, and hybrid work will likely remain common as companies compete with larger firms for talent.
Average hourly earnings are expected to rise by 0.3% in December, maintaining an annual increase of 4%, similar to November.
Hoersten believes the labor market will remain relatively stable, with no drastic changes in either direction. She emphasized that the market is still strong, and companies just need to navigate the recent uncertainty before returning to a steady state.
