In 2024, employment growth in the USA continued to cool down, returning to a familiar pace roughly comparable to job creation speeds from 2010 to 2019. As of November, the USA's economy added approximately 0.18 million jobs each month. The unemployment rate slightly increased but remains close to historical lows.

These data help to boost confidence, allowing the market to continue believing that the USA economy is gradually moving towards "possibility of a soft landing,", which is successfully curbing inflation without falling into recession. How this trend will evolve in December will become clearer when the USA Labor Statistics Bureau releases the last non-farm employment report for 2024, which will be published at 21:30 Beijing time on Friday.

Economists expect that last month's employment growth was robust but relatively stable, with an addition of 0.16 million non-farm jobs anticipated, and the unemployment rate expected to remain unchanged at 4.2%. Nela Richardson, the chief economist at ADP, stated on Wednesday:

"2024 presents a very stable labor market, achieving a balance between supply and demand for the first time post-pandemic."

Although the theme of the USA job market last year was stability, strength, and robustness, 2025 could be entirely different. She said, "I don't think we will maintain stability. It is well known that the economy can change very rapidly."

In recent months, liquidity that typically appears in a healthy labor market has started to meet obstacles: hiring activity has fallen to a decade-low, an increasing number of workers are staying put, and job searching is taking longer. Cory Stahle, an economist at Indeed Hiring Lab, said:

"This is still a relatively healthy labor market; but it is also quite polarized... your experience in the labor market largely depends on your industry or occupation."

Economists attribute this slowdown and hesitation to various factors, including the normalization after the pandemic, employment growth driven by a few Industries, high interest rates, technological advances, and general uncertainty about economic direction, Global events, and the potential policies of the newly elected president Trump.

What do Other employment data imply?

Various employment market data this week show that, although activity in the USA labor market has cooled, it remains stable.

The closely watched "little non-farm" ADP report shows that employment growth in December has "slowed down," with employers adding approximately 0.122 million jobs. This number is a decrease from the 0.146 million net new private sector jobs reported by ADP in November. Additionally, the wage growth for those remaining in their positions has slowed to 4.6%, the slowest pace since July 2021.

Richardson stated that despite the significant slowdown in employment growth, there has been no recession in the overall labor market. She mentioned that this can be partly attributed to low levels of layoffs and voluntary turnover. The latest labor mobility data released on Tuesday shows that the resignation rate is at its lowest level since the peak of the pandemic.

Additionally, new data released on Thursday shows that the number of layoffs in December decreased compared to the previous month but remains at a high level compared to last year. According to a new report by Challenger, Gray & Christmas, employers in the USA announced 38,792 layoffs in December, a 33% decrease from November; while the total announced layoffs for the entire year of 2024 reached 761,358, the highest level since 2009.

The company's senior vice president Andrew Challenger stated in a statement:

"Due to rapid technological developments and changes in the economic environment, companies experienced extraordinary transformations in 2024... Most employers expect that the future government coming to power will bring additional uncertainty, leading to slowed hiring and increased layoffs across various sectors in the short term."

According to data released by the Department of Labor on Wednesday, the number of initial unemployment claims fell to 0.201 million last week, the lowest total since February 2024. The number of continuing unemployment claims is close to the highest level in three years, indicating that the time it takes for unemployed individuals to find work is extending. However, the unemployment claims data may fluctuate, especially during holiday periods, and is often revised.

Industries Facing Headwinds.

In the coming months, some of the biggest questions will be answered—particularly the extent of the impact of Trump’s trade, immigration, tax, and fiscal policies, which may strengthen certain industries while severely weakening others.

Elise Gould, a senior economist at the Economic Policy Institute, said:

The labor market is not in a vacuum... Currently, indicators such as wage growth, a high employment-population ratio, and a low unemployment rate show that conditions are quite strong, and unless there are significant policy changes, the status quo is unlikely to change.

She added, "It looks like the new government will change some policies, which may lead to weakness in certain aspects of the economy."

Gould is not the only economist sounding the alarm; she and others warn that measures such as severe tariffs, mass deportations of illegal immigrants, and plans to 'shrink the government' could reignite inflation and increase the cost of living. This could exacerbate job shortages in sectors such as Agriculture, Medical Care, Food Service, Child Care, and Construction; and heavily impact Institutions that provide services to the public.

It is noteworthy that some industries facing headwinds have driven most of the job growth over the past year. Data from the Bureau of Labor Statistics shows that from January to November, the private Medical Care and Social Assistance sector accounted for 75% of total job growth: Medical Care 41%, Government 21%, and Leisure and Hospitality 13%. Economists express concern that the concentration of new jobs in these three industries shows signs of losing momentum.

The aforementioned economists stated in their outlook report that as the recruitment in these Industries returns to pre-pandemic levels, job growth has slowed, and if Trump fulfills his campaign promises, they are likely to weaken further.

Optimistic outlook.

Julia Pollak, the chief economist at the recruitment website ZipRecruiter, expressed a strong optimism for further improvements in the labor market this year.

She said, "Perhaps the increase in job opportunities in November is the first sign of hiring improvement in 2025." She also mentioned that the main optimistic reason this year is that the Federal Reserve has started to cut interest rates in 2024. There is a lag in the effects of monetary policy, so the three rate cuts so far are still gradually impacting the economy. Moreover, there may be more rate cuts on the way.

"The number of Banks willing to issue loans to Consumers continues to rise, various retail outlook surveys show improvements in retailer performance, and Indicators such as vehicle sales suggest that lower borrowing costs have significantly improved Consumers' affordability, sufficient to boost sales and activity."

Pollak mentioned that the ripple effect of the labor market may be slightly lagged, noting that companies want to ensure that sales growth is sustainable before adding more employees, "but the longer these improvements last, the greater the likelihood of a labor market rebound."

Additionally, she noted that hiring activity in the financial sector is accelerating due to the recent optimistic market performance and expectations for relaxed Trade regulations. She also pointed out that although the incoming government has listed improving efficiency as a target, employment growth in government sectors is likely to continue.

According to data from the USA Bureau of Labor Statistics, employment growth in government sectors is mainly concentrated in local and state governments, accounting for 12.3% and 6.6% of total employment growth, while federal jobs only account for 2%.

She said: "A large portion of this is in places like Texas, Florida, and Nevada, and most government recruitment reflects population growth... When there are more children being born in your area, there will be a need for more public school teachers; when there are more businesses, tax revenue, and population movement, there will be more police." "I don't think this will become the goal of the government efficiency department."

Editor/lambor