Hiring Surprisingly Surged In December

The job market was supposed to slow down in December; instead, it hit the gas.

U.S. employers added 256,000 jobs in December, up from a revised 212,000 in November, the Bureau of Labor Statistics said Friday. It was the most jobs added in any single month since March and blew past the 155,000 forecasters had expected, according to a survey of economists by Dow Jones Newswires and The Wall Street Journal. The unemployment rate fell to 4.1%, whereas the median forecasters called for it to stay flat at 4.2%.

The solid job growth is a double-edged sword for the health of the economy. On the one hand, it reduces the possibility that employers are on the verge of a wave of layoffs, as some experts have warned. On the other hand, it means borrowing costs could stay higher for longer, as the Federal Open Market Committee, the group that sets monetary policy at the Fed, has less reason to cut its benchmark interest rate to stoke the economy with easy money and help out the job market.

“Today’s job report suggests we shouldn’t expect to see a rate cut coming out of the next few FOMC meetings,” Elyse Ausenbaugh, head of investment strategy at J.P. Morgan Wealth Management, wrote in a commentary. “The data underscored that this is a strong economy that doesn’t currently need meaningful additional policy easing to see its expansion persist.”

Investors scaled back their expectations that the Fed will cut rates at any point in 2025. As of Friday morning, financial markets were pricing in a 28% chance the Fed would not cut the fed funds rate at all in 2025, up from nearly 14% the day before, according to the CME Group’s FedWatch tool, which forecasts rate movements based on fed funds futures trading data.

Update, Jan.10, 2024: This article has been updated with additional commentary.