In December last year, employment in the USA accelerated, and the unemployment rate unexpectedly fell, marking the end of another year of resilience in the labor market, but at the same time supported the reasons for the Federal Reserve to slow down interest rate cuts.

A report released by the USA Bureau of Labor Statistics on Friday showed that non-farm employment increased by 0.256 million in December last year, significantly surpassing the expected 0.16 million, with slight downward adjustments in data from the previous two months. The unemployment rate fell to 4.1%, and the average hourly wage grew by 0.3% compared to November.

After the data was released, spot Gold fell nearly 15 dollars in the short term, the USD rose more than 50 points in a short time, and there was a sell-off in the Global bond market, with US bond yields rising sharply; the 2-year Treasury yield increased to 4.36%, the 10-year yield rose to 4.77%, and the 30-year Treasury yield surpassed 5%. Traders expect the Federal Reserve will only cut rates once in 2025, possibly as early as June.

The report shows that the growth of non-farm employment in December last year was mainly driven by Medical Care and Social Assistance, Retail Trade, Leisure and Hospitality. Government employment also saw an increase. Manufacturing and Wholesale Trade both experienced declines.

The participation rate, which is the proportion of the population that is working or looking for work, remained unchanged at 62.5%. The unemployment rate for workers aged 25-54, also known as Gold age workers, also remained the same. Additionally, the number of permanent job losses decreased, the number of voluntary resignations increased, and the median duration of unemployment also declined.

It is worth noting that the USA Bureau of Labor Statistics revised down the previous non-farm employment data, with the non-farm job growth in October last year revised up from 0.036 million to 0.043 million; the non-farm job growth in November last year revised down from 0.227 million to 0.212 million. After the revision, the total non-farm job growth in October and November last year is 0.008 million lower than before the revision.

The USA Bureau of Labor Statistics noted that in 2024, employment increased by 2.2 million (an average monthly increase of 0.186 million), which is lower than the growth of 3 million in 2023 (an average monthly increase of 0.251 million). The unemployment rate in December showed little change, remaining at 4.1%. After rising earlier in 2024, the unemployment rate has been between 4.1% and 4.2% for the past seven months. The number of unemployed persons in December was 6.9 million, with little change.

Friday's report confirmed that despite high borrowing costs, persistent inflation, and political uncertainty, the employment market in the USA performed well last year. Although the demand for workers has slowed and unemployment is expected to rise in 2024, the economy still added 2.2 million jobs, below the 3 million in 2023, but higher than the 2 million in 2019.

Market Analyst John Brady stated that the non-farm employment data is a "big number," and the Federal Reserve's attention is now completely back on inflation.

After improvement in inflation over recent months, the Federal Reserve's focus has firmly returned to inflation, with several officials suggesting that after reducing borrowing costs by a full percentage point in 2024, they may maintain interest rates stable for a period. However, it remains to be seen how the economic agenda of the elected president, Trump, particularly regarding large-scale deportation of illegal immigrants and plans to impose punitive tariffs on imported goods, will affect the labor market.

Gregory Faranello, the Head of Interest Rate Trade and Strategy at AmeriVet Securities, stated that this is a very reliable report that supports the market's expectation for the Federal Reserve to skip this month's meeting and possibly more. With the transition of two administrations, this is also an important figure. The current focus is now on inflation. As the new administration takes office, higher inflation data and a strong job market will heighten calls for interest rate hikes.

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Editor/lambor