As the year comes to a close, the US job market is expected to show a slowdown in growth, with economists predicting a modest increase in nonfarm payroll employment in December. The median estimate for total nonfarm payroll employment for the month is 153,000, a significant decrease from the previous month's 227,000 jobs added. The unemployment rate is forecast to remain steady at 4.2%.

Several factors contribute to the expected slowdown in job growth in December. Seasonal factors, such as the winter break in the labor market, typically lead to an increase in unemployment and underemployment. In December 2024, unemployment rose by 33,000 to 2,807,000, and underemployment increased by 5,000 to 3,581,000. Additionally, high interest rates have discouraged borrowing and spending, throwing some sand in the gears of the job market. Policy uncertainty surrounding the incoming Trump administration in 2025 could also contribute to the slowdown in job growth.
The unchanged unemployment rate in December 2024 could have implications for wage growth and inflation expectations. A stable unemployment rate suggests that the demand for labor remains relatively constant, which could help maintain wage growth. In the context of the materials, wage growth has been ticking up from 3.6% in July to 4.0% in November. A stable unemployment rate could help sustain this wage growth, as employers may need to continue offering competitive wages to attract and retain workers. This is supported by the analysis from Gus Faucher, chief economist for the PNC Financial Services Group, who expects wage growth around 3.5% on an annual basis to be consistent with the Fed's 2% inflation target.
However, the trajectory of the job market over the next year is uncertain and could depend on incoming president Donald Trump's policy decisions. Some economists expect the job market to bounce back in 2025, while others predict a continued slowdown. The course of the job market could hinge on the extent to which Trump implements tariffs on foreign trade, imposes tax cuts for corporations, or other major policy shifts he promised on the campaign trail. Financial market participants will be watching the jobs numbers closely amid concerns that a stronger-than-expected reading could keep the Federal Reserve from cutting interest rates again.
In conclusion, the US job market is expected to show a slowdown in growth in December, with a modest increase in nonfarm payroll employment and an unchanged unemployment rate. Several factors contribute to the expected slowdown, including seasonal factors, high interest rates, and policy uncertainty. The unchanged unemployment rate could have implications for wage growth and inflation expectations, but the trajectory of the job market over the next year remains uncertain and depends on incoming president Donald Trump's policy decisions.