Jobs are surging in US but this may not be good news for homebuyers

US job growth surged and unemployment fell last month, an unexpected show of strength that may prove costly to homebuyers and businesses who were counting on sharply lower interest rates to lower the cost of buying everything from refrigerators to homes, AP reported.

Employers added 256,000 jobs last month, up from 212,000 in November, the Labor Department reported Friday.

Unemployment, which was expected to hover around 4.2 per cent, fell to 4.1 per cent last month. Health care companies added 46,000 jobs, retailers 43,000 and government agencies at the federal, state and local levels 33,000.

The final jobs report of 2024 underscores that the economy and hiring were able to grow at a solid pace even with interest rates much higher than they were before the pandemic. As a result, the Federal Reserve could be much less likely to cut borrowing costs again in the coming months. The Fed cut its rate three times last year in part out of concern that hiring and growth were flagging.Overall, the solid jobs figures suggest the economy is entering a post-COVID period of steady growth, higher interest rates, low unemployment, and slightly elevated inflation.
The U.S. continued to create jobs steadily throughout 2024, 2.2 million in all. That is down from job growth of 3 million in 2023, 4.5 million in 2022 and a record 6.4 million in 2021 as the economy bounced back from massive COVID-19 layoffs. But last year’s average of 186,000 new jobs a month still slightly exceeds the pre-pandemic average of 182,000 from 2016-2019, solid years for the economy.
U.S. markets tumbled on the release of December’s jobs numbers as investors sensed the odds of further interest rate cuts have faded. But rates are still painfully high for Americans trying to buy a house, a car, or even a kitchen appliance. Mortgage rates have risen for four consecutive weeks to reach the highest level since July.

Average hourly wages rose 0.3 per cent from November and 3.9 per cent from a year earlier. The year-over-year wage gain was slightly less than economists had forecast.

FAQs

Q1. What do we know about job growth in US?
A1. Employers added 256,000 jobs last month, up from 212,000 in November, the Labor Department reported Friday.

Q2. What do we know about US economy?
A2. Overall, the solid jobs figures suggest the economy is entering a post-COVID period of steady growth, higher interest rates, low unemployment, and slightly elevated inflation.