The U.S. labor market’s “not too hot” and “not too cold.”
That’s the conclusion from economists at Wells Fargo, following the Department of Labor (DOL) report that nonfarm payroll employment rose by 256,000 in December. That number is above the consensus growth estimate of 155,000 jobs.
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“Over the past three months, nonfarm payroll growth has averaged 170,000, a solid pace of hiring that should be fast enough to keep the unemployment rate relatively steady,” concluded Wells Fargo economists Sarah House and Michael Pugliese in a research note on Friday. “To that end, the unemployment rate fell by one-tenth to 4.1 percent and is right in the sweet spot of the Fed’s projections for a ‘not too hot’ and ‘not too cold’ labor market.”
The DOL data indicates that retail trade added 43,400 jobs, following a job loss of 29,200 in November. Fashion retailers in apparel, accessories, footwear and jewelry added 23,000 jobs in December. The data doesn’t break down how many positions are full time or part time.
Upcoming January data points can reflect declines as seasonal workers hired for holiday end their employment. Employment data for January will be available on Feb. 7, 2025, and could provide more information on the health of retail employment in fashion. Meanwhile, the tentative agreement on new six-year ILA-USMX Master Contract, announced this week, indicates a framework for implementing technologies that will create new jobs while modernizing the East and Gulf coast ports.
Earlier in the week, the ADP National Employment Report on Wednesday indicated that job creation by private employers increased by 122,000 last month, less than the expected 136,000. Data from ADP and DOL can suggest different trends due to how they measure the monthly data.
Nela Richardson, ADP’s chief economist, said December data reflected a “more modest pace” of growth” and that health care created more jobs than any other sector. Manufacturing created just 10,000 jobs last month, while the service sectors, including retail, added 112,000 positions. The bulk of the new jobs were on the West Coast at 82,000, followed by the Northeast and South at 19,000 each and the Midwest at 7,000.
While the ADP report suggests that hiring might be slowing, the DOL data indicates economic strength that gives the Federal Reserve little incentive to cut rates to stimulate economic growth. The Wells Fargo economists concluded that a rate cut at the Fed’s Jan. 29 meeting is “off the table, and March looks increasingly unlikely as well.”