Jobs data for December will add to ongoing mixed signals in the U.S. labor market.
Analysts surveyed by Dow Jones expect 155,000 jobs added on the month, down from 227,000 in November, with the unemployment rate expected to have remained unchanged at 4.2%.
On their own, those figures suggest a still relatively healthy jobs market. Yet the recent trend has been unfavorable: 155,000 new jobs would be among the fewest added in the pandemic era. And the unemployment rate has been stuck at or above 4% for at least six consecutive months.
What’s more, new jobs are increasingly being added in an ever-narrower slice of employment sectors: mainly health care, government and, to a lesser extent, construction, finance and insurance.
By comparison, growth in business and professional services, as well as manufacturing — sectors that generally encompass better-paying occupations — have experienced almost no net new hiring in recent quarters.
Overall, the rate of hiring has fallen back to pandemic-era lows.
The upshot is that the duration of an unemployment spell is now back well above pre-pandemic lows, with the median bout of joblessness lasting more than 2½ months.
Yet layoffs also remain subdued, creating a kind of deadlocked job market.
“Surveys continue to show convincing signs of slowing labor demand,” Seema Shah, chief global strategist at Principal Asset Management, wrote in a note to clients this week. “However, that weakness has not yet translated into widespread job losses. Instead, it appears that the labor market has become frozen, with companies hesitant to meaningfully shrink or expand their workforce amid lingering uncertainty.”
On balance, however, forecasters project that hiring will begin to pick up again, albeit slowly, as overall economic activity continues at a steady clip and interest rates keep ticking down in the wake of Federal Reserve easing.
In fact, the Bureau of Labor Statistics also reported this week that job openings had ticked higher. That, wrote Julia Pollak, chief economist at ZipRecruiter, “hints at the possibility of better news ahead, with the potential for stronger hiring as 2025 gets underway.”
Small-business openings have especially been growing, Pollak said, which other surveys suggest is largely thanks to optimism about what the economy will look like once President-elect Donald Trump takes office.
Consumer credit data released this week also show U.S. borrowers are seeking to pay down their debt balances after an aggressive run-up in purchasing behavior. That may suggest slower spending — but the same dataset showed borrowing for auto purchases surged in November, suggesting a more balanced picture of consumer health.
Guy Berger, director of economic research at the Burning Glass Institute which specializes in the future of work, has said that for anyone looking for a job at the moment, the short-term picture is grim.
But in a new note, Berger said further labor market cooling should start to reverse in the coming months, given surveys showing U.S. firms increasingly optimistic about adding to head counts in 2025.
For instance, S&P Global reported this week that its business confidence services purchasing managers index was at an 18-month high, with the employment component increasing for the first time in five months.
“There are a confluence of factors that will lead the labor market to stabilize and possibly even warm up a little,” Berger wrote.
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