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That September 50 basis point cut feels like a long time ago
US job growth in December surged to a nine-month high with 256,000 payroll gains, while the unemployment rate unexpectedly dropped to 4.1%, signaling labor market resilience despite economic headwinds.
US added 256,000 jobs in December, the highest in nine months.
Unemployment rate fell unexpectedly to 4.1%.
The US labour market showed remarkable strength to close out 2024, with December employment gains reaching their highest level in nine months and the unemployment rate unexpectedly declining, underscoring the economy’s resilience.
Nonfarm payrolls rose by 256,000 in December, according to the Bureau of Labor Statistics, slightly outpacing forecasts. Revisions to the previous two months revealed modest downward adjustments, while the unemployment rate edged down to 4.1%. Average hourly earnings advanced 0.3% from the prior month.
The robust labour data triggered swift reactions in financial markets, with Treasury yields and the dollar climbing sharply. Meanwhile, S&P 500 futures fell.
Despite facing headwinds such as elevated borrowing costs, persistent inflation, and political uncertainty, the US labor market demonstrated durability throughout 2024. The economy added 2.2 million jobs over the year, down from the 3 million recorded in 2023 but exceeding the 2 million created in 2019, a pre-pandemic benchmark.
As the Federal Reserve pivots back to combating inflation, the latest data complicates the central bank’s policy calculus. Officials have signaled a pause in rate adjustments following a full percentage-point reduction in 2024, leaving markets to speculate on the timing of any further easing.
While hiring moderated compared to previous years, December’s report reinforces the view that the labor market remains a cornerstone of economic stability, even amid an evolving macroeconomic landscape.
BoE’s Breeden signals gradual rate cuts, but timing uncertain
Bank of England Deputy Governor Sarah Breeden hinted at a measured approach to easing monetary policy, citing diminishing impacts from prior economic shocks.
“I expect to continue to remove restrictiveness gradually over time,” Breeden remarked during a speech, aligning with expectations for a cautious transition away from tight monetary policy.
However, she tempered optimism around a predictable pace of rate cuts, emphasizing that the timing remains uncertain. “It is difficult to know how quickly rates should fall,” she cautioned, underscoring the complexities of managing policy in the face of evolving economic conditions.
