In December, the U.S. experienced unexpected growth of 256,000 in payrolls, while the unemployment rate decreased to 4.1%.

In December, job growth exceeded expectations, potentially reducing the Federal Reserve's motivation to lower interest rates in 2021.

The Bureau of Labor Statistics reported on Friday that nonfarm payrolls increased by 256,000 in December, surpassing the 212,000 increase in November and the 155,000 forecast from the Dow Jones consensus.

The unemployment rate decreased by 0.1 percentage point to 4.1%, while an alternative measure that includes discouraged workers and part-time positions for economic reasons fell to 7.5%, a decrease of 0.2 percentage point and the lowest since June 2024.

After the report's release, Treasury yields soared while the stock market futures were negative.

Despite inconsistent growth in employment throughout the year, the final two months of the labor market showed strength, prompting the Fed to consider its next moves on monetary policy.

The labor market, which Fed officials have emphasized should not contribute to inflation, saw wages grow slightly below expectations.

The average hourly earnings increased by 0.3% in the month, which was in line with predictions, but the 12-month gain of 3.9% was slightly below expectations, suggesting that wage inflation may be decreasing. The average work week remained at 34.3 hours.

The sources of job growth were healthcare (46,000), leisure and hospitality (43,000), and government (33,000).

Retail experienced a significant increase of 43,000 after experiencing a decline of 29,000 in November, leading up to the holiday shopping season. Despite this, the sector only saw a payroll growth of 2.2 million for the full year, which was a decrease of nearly one-third from the 3 million gain in 2023.

Recent revisions for October and November were more substantial than the previous months. The October count increased by 36,000, while the November number decreased by 15,000 from the initial estimate.

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