Morning Market Brief January 9, 2025

Data since the middle of 2024 has shown signs that the US labour market is slowing. However, that doesn’t mean it is completely sinking. Data released over the last few days has reinforced this point. While losing some momentum, the labour market remains relatively tight. The US labour market has been a source of strength for the US economy, allowing US households the resiliency to keep spending despite tight financial conditions.

• ADP announced that private businesses in the US added 122,000 jobs in December, down from the 146,000 added in the previous month. This was the lowest number of job additions in a month since August. A rise in jobs in the education and health services industry was partially offset by a drop in manufacturing jobs.
• A separate report from the US Bureau of Labor Statistics on Tuesday showed job openings in the US rose by 4.8% to 8.1 million in November. This marked the highest number of job openings since May 2024.
• Initial jobless claims fell to 201,000 over the week ended January 4 from 211,000 in the previous week. Initial jobless claims have dropped to their lowest level since February 2024.
• The US Bureau of Labor Statistics will release the US unemployment rate and nonfarm payrolls data for December this Friday. The unemployment rate edged higher to 4.2% in November, which is relatively low by historical standards.

Some of the data is pointing to a labour market that is losing momentum. Job growth has tailed off, while the unemployment rate has ticked higher. Still, the US labour market has not fallen to a level that could have a significant impact on the US economy. Combined with still-elevated inflation and stable economic activity, tight labour market conditions have kept the US Federal Reserve Board from aggressively lowering interest rates.

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