Total Non-Farm payrolls rose by 256,000 in December. Employment was up in health care, government and social assistance. Retail added jobs in December, after losing a job in November. Employment rose by 2.2 million in 2024 (an average monthly gain of 186,000, down from the 3.0 million increase in 2023 (an average monthly gain of 251,000).
Healthcare added 46,000 jobs in December, with gains in home health care services (+15,000), nursing and residential care facilities (+14,000), and hospitals (+12,000). Health care added an average of 57,000 jobs per month in 2024, the same as the average monthly gain in 2023.
Retail added 43,000 jobs in December, after losing 29,000 jobs in November. In December, employment increased at clothing, clothing accessories, footwear, and jewelry retailers (+23,000); general merchandise retailers (+13,000); health and personal care retailers; and building materials retailers lost And garden equipment and supplies jobs (-11,000).
Overall, retail employment was little changed in 2024, after an average monthly gain of 10,000 in 2023.
Government employment continued to trend upward in December (+33,000). The government added an average of 37,000 jobs per month in 2024, below the average monthly gain of 59,000 in 2023. Over the month, employment continued to trend upward in state government (+10,000).
Social assistance employment increased by 23,000 in December, mostly in individual and family services (+17,000). Social assistance added an average of 18,000 jobs per month in 2024, below the average monthly gain of 59,000 in 2023. The labor force participation rate, at 62.5 percent, was unchanged over the month and has remained in a narrow range of 62.5 percent to 62.7 percent since December 2023. The employment-to-population ratio, at 60.0 percent, changed little over the month and over the year.
The Importance of US Nonfarm Employment Change in Assessing the U.S. Economy
The change in nonfarm employment is important for several reasons when assessing the U.S. economy:
Economic Health Index: Provides an immediate picture of job creation, reflecting the overall health of the economy. A strong increase indicates economic expansion, while a decline may indicate contraction.
Consumer spending: Employment levels directly affect consumer spending, which is the main driver of economic growth. More jobs typically lead to increased disposable income and spending, boosting economic activity.
Labor market dynamics: The report highlights trends in various sectors, helping analysts understand where growth is occurring or where sectors may struggle. This can help with investment decisions and economic forecasts.
Inflationary pressures: Changes in employment can indicate potential inflationary pressures. If employment rises rapidly, it could lead to wage increases, contributing to inflation, prompting the Fed to adjust monetary policy.
Policy decision-making: Policymakers, including the Fed, closely monitor this data to guide decisions on interest rates and other economic policies. Strong employment figures could tighten monetary policy, while weak figures could prompt stimulus measures.
Market sentiment: The change in nonfarm employment affects investor sentiment and can drive market reactions across stocks, bonds, and currencies. Positive data can boost confidence, while negative data can lead to market volatility.
Long-term trends: Analyzing data over time helps identify long-term trends in the labor market, such as shifts in employment patterns, labor force participation, and the impact of economic policies.
Nonfarm Employment is a crucial indicator that provides insights into the labor market, economic growth, inflation, and overall economic stability, making it essential for analysts, investors, and policymakers.
Financial markets typically react to a strong or weak report on US Nonfarm Employment Change
Financial markets typically react strongly to the report of non-farm employment change due to its implications for economic health.
Here’s how they usually respond:
Powerful report:
- Stock markets: A strong increase in employment often boosts investor confidence, leading to higher stock prices as this indicates economic growth and corporate profitability.
- Bond Markets: Strong employment data could boost bond yields, as investors expect a potential rate hike by the Fed to curb inflation.
- Currency value: The US dollar may rise against other currencies, driven by expectations of higher interest rates and a strong economy.
- Inflationary pressures: Changes in employment can indicate potential inflationary pressures. If employment rises rapidly, it could lead to wage increases, contributing to inflation, prompting the Fed to adjust monetary policy.
Poor report:
- Stock Markets: A weak employment report could send stock prices lower as it raises concerns about an economic slowdown and lower consumer spending.
- Bond Markets: Bond yields may fall as investors seek safe-haven assets, expecting the Fed to cut interest rates to stimulate the economy.
- Currency value: The US dollar may weaken, reflecting concerns about the health of the economy and low prospects of interest rate hikes.
- Market Sentiment: The change in nonfarm employment affects investor sentiment and can drive market reactions across stocks, bonds and currencies. Positive data can boost confidence, while negative data can lead to market volatility.
Overall, the NAMA Change Report is a critical indicator that shapes market sentiment and influences trading strategies across different asset classes and overall economic stability, making it essential for analysts, investors, and policymakers.
