2024 End-of-Year Job Growth Is Solid

U.S. employers added 256,000 new jobs in December 2024, surpassing economists’ expectations, according to the latest employment report from the U.S. Bureau of Labor Statistics. Employment trended up in health care and government, two sectors which drove much of the job gains last year.

Revisions for prior months were less substantial than recent months, with the October count being revised up by 7,000 jobs, and the November number cut by 15,000.

U.S. employment rose by 2.2 million jobs in 2024—an average monthly gain of 186,000, and more than double the number expected by economists heading into the year. In comparison, about 3 million jobs were created in 2023, for an average monthly gain of 251,000.

Some economists are optimistic about hiring in 2025 since the Federal Reserve began cutting interest rates last year. Monetary policy takes time to work its way through the economy, but after today’s strong report, there is less momentum to cut rates further anytime soon.

“The U.S. labor market closed out 2024 on an optimistic note,” said Julia Pollak, chief economist at ZipRecruiter. “The Fed’s 100 basis points of cuts have resulted in some meaningful improvements for consumers in recent months. While the labor market often lags, today’s report suggests that a labor market rebound may be starting.”

The December jobs report confirms “that tailwinds continue to propel the labor market forward despite continued cooling in 2024,” said Cory Stahle, an economist at the Indeed Hiring Lab. “As we turn our attention to the new year, many questions remain about the impact of potential policies from the incoming presidential administration and whether the labor market has enough steam left to nail a soft landing,” he said. “For now, today’s data are likely to reinforce the Federal Reserve’s confidence that the labor market still has solid momentum and that they have room to wait on interest rate-cutting decisions.” 

Sam Kuhn, a labor economist at Appcast, pointed out that earlier this summer, the U.S. labor market began to show cracks as job growth hovered just above 100,000. “This cooling trend has begun to dissipate as both November and December’s labor markets demonstrate continued resilience,” he said. “Now what? With the new Trump administration set to take office in 2025, it’s unclear what impact policy changes to immigration, trade, and taxes will have.”

The caution exhibited by employers in 2024 owes to factors such as high interest rates, rapid technological change, and global uncertainty. While job growth slowed from the pandemic recovery boom, the overall labor market remained stable and job openings are now at a six-month high.

2024 had its challenges, Stahle said. “The unemployment rate caused a lot of concern in the first half of the year, rising from 3.7% in January to 4.2% in July. And the prime-age labor force participation growth has leveled off and looks dangerously close to reversing its multi-year increasing trend.” 

Ger Doyle, U.S. country manager at ManpowerGroup, added that the labor market may still face challenges until inflation is under more control, which is necessary to prevent slower hiring, layoffs, and reduced job growth.

Geno Cutolo, head of Adecco North America, said that his firm sees 2025 as a year of durability, as economic conditions continue to moderate and the labor market largely returns to pre-pandemic levels. “However, flexibility in hours and work environment remains critical to attract and retain talent, with both employers and workers willing to negotiate on what works best for both,” he said.

Industry Breakdown

Hiring was driven by the same sectors that have powered the labor market all year—health care (46,000 jobs), government (33,000), and leisure and hospitality (43,000).

“For most of the past six months, job growth has been strikingly narrow, concentrated in health care and government employment,” Kuhn said. “Gains were more evenly distributed in December as retail trade [43,400], and professional and business services [28,000] made gains significantly above their previous trends.”

A late Thanksgiving holiday may have pushed some seasonal hiring from November to December. Manufacturing on the other hand took a beating, losing 13,000 jobs.

“The main threat looming over goods-producing industries like manufacturing is tariffs, as the industry continues to shed jobs against a strong dollar impacting export sales for U.S. producers,” Kuhn said.

“Our real-time data shows trends indicate a growing demand from employers, particularly in digital services, health care, and convenience retail,” Doyle said. “In contrast, traditional retail and food service sectors are experiencing only modest changes or declines.”

Doyle said that the temp job market was a bright spot last month, with open job postings reaching their highest levels since September 2023 and new job postings at their peak since March 2022.

“This surge is driven by an increased demand for IT roles as organizations turn to project work to develop artificial intelligence and machine learning,” he said.

Unemployment Dips Down

The unemployment rate in December fell slightly to 4.1 percent. Claims for unemployment benefits have increased slightly over the past year but remain near historically low levels.

“Unemployment has hovered between 4.1-4.2% since June 2024, plateauing after the concerning rise to start the year,” said Daniel Zhao, Glassdoor lead economist.

“The share of employed workers who are part-time for economic reasons also dropped in December to the lowest rate since June,” Zhao said. “That’s an encouraging sign that more workers who want full-time hours are getting them.”

Full-time employment increased by 87,000 people in December, while part-time workers rose by 247,000. Long-term unemployment fell in December, a turnaround from the slow-but-steady rise in long-term joblessness in recent months.

“The prime-age employment-population ratio ticked up to 80.5% while prime-age labor force participation ticked down to 83.4%,” Zhao said. “Both are down from their mid-year highs, though remain at relatively strong levels by 21st century standards.”