By Gregory Heym, BHS Chief Economist and and host of Crossing The Line
Another month, another unexpected jobs report. Welcome to the "we shouldn't be surprised by these numbers anymore" edition of The Line.
Employment Rose Much More than Expected in December
That headline says it all, but I wouldn’t be doing my job if I didn’t give you the highlights from the December jobs report:
- 256,000 jobs were added last month, which crushed the 155,000 forecast. That’s the largest monthly employment gain since March of 2024.
- The biggest employment gains were in health care (+46,000), retail (+43,000), and leisure and hospitality (+43,000). Retail’s increase is noteworthy, since retail employment fell by 29,000 jobs in November.
- The household survey—which is used to calculate the unemployment rate—showed a 478,000 increase in employment last month. That’s noteworthy, because in the prior two months it showed a loss of 619,000 jobs. As I’ve said before, the payroll and household surveys can show vastly different numbers, so it’s nice when at least they are moving in the same direction.
- The unemployment rate ticked down from 4.2% to 4.1%.
- Wages rose 0.3% in December and are 3.9% higher than a year ago. The annual increase was slightly below expectations, but still decent.
- Employment in October was revised up by 7,000, while November’s figure was revised down by 15,000, for a net change of -8,000. That’s a very small revision for a two-month period.
So, pretty much any way you look at this report you see a very hot labor market. If you’re somehow still not convinced of this, here’s two other bits of data we got this week:
- Weekly jobless claims just fell to an 11-month low of 201,000.
- The number of job openings rose to 8.1 million.
- That’s the good news, now for the bad:
- You can forget about the Fed cutting rates at their January meeting, and it doesn’t look good for March either. The Fed will need to see slower growth in hiring and inflation before they consider any cuts this year.
- The 10-year Treasury yield spiked after the December jobs report came out, so mortgage rates are headed higher. That’s especially bad news considering that mortgage rates have already been rising.
- Stocks didn’t like this news either, posting steep losses this morning.
While homebuyers—and humble real estate economists—hate it when mortgage rates are rising, at least we can be grateful that jobs are still plentiful in the U.S.