Despite a slight increase in the unemployment rate compared to the beginning of the year, the job market closed out the year on a positive note with the addition of 256,000 jobs to the economy in December, as reported by data released by the U.S. Bureau of Labor Statistics (BLS) on Friday.
Unemployment rate stood at 4.1% at the end of the year, down from 4.2% in the previous month. The rate has remained steady at either 4.1% or 4.2% over the past seven months, with 6.9 million people unemployed in December.
The largest job gains in December were seen in the care (+46,000 jobs), government (+33,000 jobs), retail trade (+43,000 jobs), and social assistance (+23,000 jobs) sectors.
The construction sector saw minimal change month-over-month, adding only 8,000 jobs. Residential building construction added 3,500 jobs, while residential specialty trade contractors added 500 positions.
The real estate and rental and leasing sector added 3,200 jobs in December, although the real estate segment lost 1,700 jobs.
Economists are optimistic about the strong job growth in December, along with a 3.9% year-over-year increase in average earnings, outpacing the overall inflation rate.
“Higher wages continuing to rise faster than inflation is a positive sign for consumers and the Federal Reserve, indicating confidence in financial stability,” said Lisa Sturtevant, chief economist at Bright MLS.
Sturtevant noted that while wage growth benefits the housing market, the impact on housing markets will vary depending on where workers are employed.
The Fed anticipates inflation concerns to persist in 2025, with potential impacts from proposed policies on tariffs and immigration affecting job growth and inflation rates.
According to senior vice president and chief economist Mike Fratantoni of MBA, the Fed is likely to halt rate cuts based on the data, leading to an increase in mortgage rates in the near future.
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