Reality vs. Sound Bytes: December 2024 Jobs Report

Let’s start with the numbers. The US economy added 256,000 jobs in December, the largest increase since March. Meanwhile, unemployment fell to 4.1% and wage growth held steady. J.P. Morgan’s Head of Investment Strategy, Elyse Ausenbaugh, summed it up with a pithy “This is a strong economy.”

Of course, real life is never as simple as sound bytes. Last month’s report may reflect the overall health of the U.S. economy. However, whether it’s “good news” or “bad news” for you personally will depend on where you’re sitting.

For example, one implication of last Friday’s report is that the Federal Reserve is unlikely to cut interest rates at its next meeting. As result—and although it feels counterintuitive—the better-than-expected jobs increase pummeled stock prices. Last Friday, the Dow fell almost 700 points, and the S&P 500 and Nasdaq fell 1.5% and 1.36%, respectively. The market’s bearish turn yielded my favorite tongue-in-cheek headline of the week, from the inimitable Downtown Josh Brown:

“Dangerous Level of Job Creation Threatens America.”

A freeze on rate cuts will also negatively impact industries that are heavily dependent on outside capital, including the life sciences and biotech industries. While these industries showed signs of life in late 2024, last week’s jobs report suggests a gradual ramp-up, rather than the steep climb we hoped for.

At its core, Josh’s quip simply reflects the uneven nature of the U.S. economy and jobs market. Consider the following: the New York Federal Reserve recently found that the number of people applying for jobs has reached a 10-year-high, and an ASA/Harris Poll found that 45% of the US workforce says they will be looking for a new job in 2025. And yet, that same survey found that 40% of job seekers didn't have a single job interview in 2024; and 72% of applicants reported that “applying for jobs feels like sending a resume into a black box.”

This isn’t surprising when you consider where these new jobs are coming from. Of the 256,000 jobs added in December, the majority came from healthcare, government and retail. Meanwhile, accordingly the BLS report, manufacturing, transportation, warehousing, financial activities, professional and business services “showed little change.” There also continues to be significant regional variation in the labor market between U.S. states and cities.

It’s worth a brief aside on manufacturing, because the latest Institute for Supply Management (ISM) Purchasing Managers Index (PMI) report came out the week prior to the jobs report. The ISM-PMI report asks manufacturers all over the country for input on things like inventory, orders, staffing and outlook. Although manufacturing has been struggling over the past two years, the December report was the best the industry has looked in a long time, including a spike in new orders. ?

So, if you are an employer reading this Newsletter, what does it all mean?

At the end of the day, the monthly jobs report is useful—but it’s rarely an accurate reflection of your specific hiring pool. Your industry, location, history, compensation, management, requirements and hiring process will all impact how you experience the labor market. And it will vary wildly.

As the market is shifting, we recommend employers consult someone with hands-on experience in your relevant market. Here at the TalentZ?k family of companies (including Simply Biotech and Defense Search), we speak with thousands of employers and candidates each month. That experience allows us to advise our clients on policies and processes to ensure that they can find the talent needed regardless of the market.

If you’d like to learn more, please contact us. And if you enjoyed this article, please subscribe to our Newsletter, The Gatekeeper, for further insights regarding the employment market and the staffing and recruiting industry.