December jobs report: Strong end to 2024
Daniel Zhao
Chief Economist at Glassdoor | Jan 10, 2025
The latest jobs numbers are out from the U.S. Bureau of Labor Statistics. What do they mean for job seekers, employers and investors? Here’s a quick take from Glassdoor’s Lead Economist Daniel Zhao.
The December jobs report is a strong bookend to 2024, with an apt performance as the job market has continually defied recession fears. Job gains in December beat expectations and unemployment and wage growth both dropped slightly in December. Heading into 2025, the job market is poised to continue gradually cooling. With concerns that inflation may be stickier than hoped in 2025, the job market still has some headwinds to weather, though betting against the labor market has been a losing bet since the pandemic.
Key stats:
- Payroll employment grew by 256,000, up from 212,000 in November. Over the course of 2024, payroll employment grew by 186,000 on average, a healthy clip.
- The unemployment rate dropped to 4.1% in December. Revisions to seasonal adjustment factors mean that 4.2% was the peak unemployment rate during 2024, with unemployment hovering at 4.1–4.2% since June.
- Average hourly earnings grew 3.9% year-over-year in December, down slightly from 4.0% in November.
Labor market theme for 2024: Gradual cooling
Over 2024, payroll employment grew by 2.2 million jobs, slower than 2021–2023 when the job market was rebounding from the pandemic but right in line to the pre-Covid 2010s when annual jobs growth averaged 2.2 million per year.
Looking back at 2024, the theme for the job market was still a gradual cooling. Over the second half of 2024, jobs in professional & business services, information, retail and transportation & warehousing barely budged at all, while job losses in manufacturing accelerated.
The sectors that have carried jobs growth recently like health care and non-education government still drove big gains, but growth there has slowed. On the other hand, leisure & hospitality and education did pick up some of the slack.
All-in-all, the picture is still of a job market where job gains are concentrated in acyclical sectors like government, healthcare and education, which does raise concerns about their sustainability. Local & state government coffers are still healthy heading into 2025 but will need to grapple with higher spending and lower revenues. And healthcare spending is expected to grow at a slightly slower pace in 2025.
Unemployment in 2024 and beyond
The most concerning development for the job market in 2024 was the steady rise in the unemployment rate in the middle of the year. This rise triggered on the Sahm rule recession indicator, though the unemployment rate plateaued for the rest of the year, resulting in the Sahm rule triggering off.
Many forecasters are projecting a modest increase in the unemployment rate for 2025. Looking ahead to 2025, the Federal Reserve’s Summary of Economic Projections from the December 2024 meeting projects a 4.3% unemployment rate in Q4 2025. In the past, increases in the unemployment rate have been difficult to arrest, so it remains to be seen whether the gradual cooling can continue, especially without the boost to labor force supply growth from immigration seen in the last few years.
More insights
Payroll employment grew 256,000 in December, well above expectations and the strongest rate since March.
Job gains continue to be driven by service industries, primarily health care & social assistance (+80,000), leisure & hospitality (+43,000) and government (+33,000). Professional and business services (+28,000) and retail (+43,400) also picked up in December after slower months recently.
Wage growth decelerated to 3.9% in December. Wage growth has hovered in this range for several months, in large part driven by hotter wage growth for nonproduction & supervisory workers (which is a smaller, volatile group that includes managers, for example). Wage growth for production & nonsupervisory workers continues to cool as the overall job market cools.
The share of employed workers who are part-time for economic reasons also dropped in December to the lowest rate since June. An encouraging sign that more workers who want full-time hours are getting them.
The prime-age labor force participation rate ticked down to 83.4% while the prime-age employment-population ratio ticked up to 80.5%. Both measures are down from their mid-year highs, though remain at relatively strong levels by the 21st century standards.
Similarly, the unemployment rate dropped across racial/ethnic groups in December. This also partially reverses the bump in Black unemployment in November as monthly data for smaller groups can be volatile.
To speak with Daniel Zhao about this report, please contact pr@glassdoor.com.
Daniel Zhao
Daniel Zhao is Chief Economist at Glassdoor. On Glassdoor's Economic Research team, he has conducted research using Glassdoor's unique data on a variety of topics affecting job seekers and employers ranging from the health of the job market to pay transparency to employee engagement & retention. His work has been cited in publications like the New York Times, the Harvard Business Review and more. Prior to joining the Economic Research team, he also worked on improving the user experience for Glassdoor’s consumer jobs product and mobile app. He holds a bachelor's degree in applied mathematics and economics from Harvard College.
