While the unemployment rate was up compared to the start of the year, the job market ended the year up, with 256,000 jobs added to the economy in December according to data released Friday by the U.S. Bureau of Labor Statistics (BLS).
Unemployment finished the year at a rate of 4.1%, down from 4.2% the month prior. The unemployment rate has hovered at 4.1% or 4.2% for the past seven months. The number of unemployed people was 6.9 million in December.
The bulk of the job gains in December occurred in the care (+46,000 jobs), government (+33,000 jobs), retail trade (+43,000 jobs), and social assistance (+23,000 jobs) sectors.
The construction sector showed little month-over-month change, adding just 8,000 jobs. Residential building construction added 3,500 jobs from November, while residential specialty trade contractors added just 500 positions.
The real estate and rental and leasing sector gained just 3,200 jobs in December, with the real estate segment loosing 1,700 jobs.
Economists believe consumers and the Federal Reserve should be pleased to see not only the strong job growth in December, but also that average earning rose 3.9% year-over-year, which is faster than the overall rate of inflation.
“While higher prices have weighed on consumers’ minds, the fact that wages continue to rise faster than inflation suggests that many individuals and families—including prospective homebuyers—are still feeling relatively confident about their financial situations,” Lisa Sturtevant, the chief economist at Bright MLS, said in a statement.
Sturtevant added that although wage growth is certainly good for the housing market, how exactly the labor market will impact housing markets will depends on where the workers are doing those jobs.
“With more employers calling workers back to the office full-time, prospective homebuyers are going to have different priorities,” she said.
The Fed has indicated that inflation is expected to remain a concern in 2025.
“Proposed policies from the incoming administration, including those related to tariffs and immigration, could have inflationary impacts, possibly leading to cooling job growth,” Sturtevant said.
According to MBA senior vice president and chief economist Mike Fratantoni, the Fed will most likely pause rate cuts as a result of the data.
“This will push mortgage rates higher in the near term,” Fratantoni said.
