U.S. Job Market Ends 2024 on Solid Footing Despite Slower Growth

Analysis based on the Bureau of Labor Statistics Employment Situation Report

The U.S. labor market wrapped up 2024 with a stronger-than-expected December, adding 256,000 jobs while maintaining a steady unemployment rate of 4.1%. This performance caps off a year of moderate but sustainable job growth, though notably cooler than the previous year's pace.

Key Highlights from December's Report

The healthcare sector continued to be a primary driver of job creation, adding 46,000 positions in December. The gains were well-distributed across the industry, with home health care services, nursing facilities, and hospitals all seeing significant increases. Throughout 2024, healthcare maintained a consistent monthly average of 57,000 new jobs, matching its 2023 performance.

Retail trade rebounded strongly in December, adding 43,000 jobs after November's decline. The surge was particularly notable in clothing and accessories stores, which added 23,000 positions, while general merchandise retailers contributed another 13,000 jobs. However, building material and garden equipment dealers saw a reduction of 11,000 jobs.

Government employment continued its upward trend with 33,000 new positions, though the sector's overall growth in 2024 (averaging 37,000 jobs monthly) was notably slower than 2023's monthly average of 59,000.

Wage Growth and Working Hours

Worker earnings showed modest but steady growth, with average hourly earnings rising by 0.3% to $35.69 in December. Over the past 12 months, wages have increased by 3.9%, suggesting that while wage growth continues, it's at a more moderate pace that may help ease inflationary pressures.

The average workweek remained stable at 34.3 hours for the fifth consecutive month, indicating that employers are maintaining steady work schedules rather than cutting hours in response to economic conditions.

Labor Market Dynamics

The unemployment rate has remained remarkably stable, hovering between 4.1% and 4.2% for the past seven months. However, some concerns emerge when looking at long-term unemployment, which has increased by 278,000 from a year earlier, with 1.6 million Americans now classified as long-term unemployed.

Labor force participation held steady at 62.5%, continuing to move within a narrow range of 62.5% to 62.7% throughout the year. This stability suggests that while the job market remains healthy, it hasn't yet generated enough momentum to draw significantly more people back into the workforce.

2024 in Perspective

The year's total job gains of 2.2 million, averaging 186,000 per month, represent a significant moderation from 2023's more robust growth of 3.0 million jobs (251,000 monthly average). This slowdown isn't necessarily concerning - it may actually represent a more sustainable pace of job creation that's less likely to fuel inflation.

Looking Ahead

As we enter 2025, the labor market appears to be achieving a delicate balance. Job growth has moderated but remains healthy, wage growth continues but at a less inflation-threatening pace, and unemployment remains low. While challenges persist, particularly in long-term unemployment, the overall picture suggests a job market that's finding its equilibrium after the post-pandemic volatility.

The key question for 2025 will be whether this moderate pace of growth can be maintained while addressing persistent challenges like labor force participation and long-term unemployment. The stability of key metrics like the unemployment rate and average workweek suggests that employers are taking a measured approach to hiring and workforce management, which could bode well for sustained growth in the coming year.