The Bureau of Labor Statistics (BLS) is set to release the final jobs report for 2024 on Friday, with experts predicting more uncertainty in 2025.
The U.S. labor market slowed in 2024, with job growth returning to pre-pandemic levels. Though the economy added about 180,000 jobs per month through November, unemployment rate rose slightly, remaining at historically low levels.
These signs suggest that the economy is heading toward a “soft landing” — controlling inflation without slipping into a recession.
Economists expect around 153,000 jobs added for the month of December, with the unemployment rate holding steady at 4.2%, CNN reported.
“2024 captured a very stable labor market, a labor market where supply and demand were in balance for the first time, post-pandemic,” Nela Richardson, chief economist at payroll company ADP, stated.
However, experts warn that 2025 may bring more unpredictability. “Economies can change quickly,” Richardson noted.
Factors like the aftermath of the pandemic, high interest rates, and global uncertainty have all contributed to a slower, more cautious job market.
The full picture of how things shaped up through December is expected to become clearer when the BLS releases the final jobs report.
Impact of Policy Changes on Job Growth
In the next few months, some important uncertainties may become clearer. This includes how trade, immigration, tax, and government policies could affect certain industries, either helping or harming them.
Economists have raised concerns that policies like high tariffs, mass deportations, and cuts to government programs could lead to higher inflation, increased cost of living and worsen job shortages in sectors such as agriculture, healthcare, food service, childcare and construction. These industries have been key drivers of job growth in recent years.
“The labor market doesn’t happen in a vacuum,” said Elise Gould, senior economist at the Economic Policy Institute. “Right now, things are pretty strong (by measures such as wage growth, high employment-to-population ratio and low unemployment), but I see no reason why those would change unless there are huge policy changes.”
From January to November, private healthcare and social assistance accounted for 75% of job gains, with healthcare alone making up 41%. However, job growth has been slowing as these industries return to pre-pandemic levels, and further softness could occur if policies promised by President-elect Donald Trump are enacted.
Optimism for the Labor Market in 2025
There’s plenty of hope that the labor market will continue improving this year, according to Julia Pollak, chief economist at ZipRecruiter.
The main reason for this optimism is that the Federal Reserve began cutting interest rates in 2024, which will likely have a positive effect on the economy, she points out.
Since monetary policy takes time to fully impact the economy, the three interest rate cuts so far are still working their way through, with possibly more cuts on the way.
Hiring is also picking up in the financial sector, she said, with the markets doing well and there are expectations of easier regulations for business deals.
Additionally, job growth could continue in the government sector, even though the incoming administration has focused on reducing government size.
Most of the growth in government jobs has been at the local and state levels, which made up 12.3% and 6.6% of overall job gains, according to Bureau of Labor Statistics data. While federal jobs accounted for a mere 2%.
Key Insights Ahead of Friday’s Jobs Report
ADP’s latest report had revealed that private sector job growth slowed in December, with employers adding 122,000 jobs, down from 146,000 in November. Pay raises also slowed, with wage growth for workers staying in their jobs dropping to 4.6%, the lowest since July 2021.
While job growth has slowed from the pandemic recovery boom, the overall labor market remains stable. Layoffs are still low, and fewer people are quitting their jobs. In fact, quit levels have dropped to their lowest since the peak of the pandemic.
Additionally, job cuts in December fell by 33% from November, with 38,792 cuts announced, though this was still 11% higher than December 2023. In total, 2024 saw the highest number of job cuts since 2020.
New unemployment claims dropped to 201,000, the lowest since February 2024. However, continuing claims, which track those still receiving benefits, rose to 1.867 million, signaling that it’s taking longer for people to find new work.
November’s jobs report showed that the average duration of unemployment has increased to 23.7 weeks, the highest since April 2022.
Meanwhile, job openings in November came in at a six-month high of just over 8 million, while layoffs were little changed and the quits rate, a measure of worker mobility, declined, CNBC reported citing Bureau of Labor Statistics release on Tuesday.
At the Federal Reserve’s December meeting, officials noted an “ongoing gradual easing in labor market” conditions, but saw “no signs of rapid deterioration,” according to minutes released Wednesday.
