December 2024 U.S. Non-Farm Payroll Data Report (this data will be released in January 2025), this report overall presents characteristics of strong employment, a slight decrease in the unemployment rate, and a modest retreat in wage growth, significantly impacting the market's expectations for the Federal Reserve's interest rate cuts. The following is a specific analysis:
1. Core employment data exceeds expectations with a rebound: The number of new non-farm jobs in December reached 256,000, far exceeding the market expectation of 165,000. The previous values were adjusted slightly, with November and October data revised down by 15,000 and revised up by 7,000, totaling a downward revision of 8,000. Job growth mainly relied on the service industry, with retail, leisure, and hospitality contributing a total of 137,000 jobs, while education and healthcare continued to provide support; however, manufacturing showed weak performance, with new jobs decreasing to -13,000, significantly dragged down by durable goods manufacturing.
2. Unemployment rate declines, labor market shows strong resilience: The unemployment rate in December dropped to 4.1%, a decrease of 0.1 percentage points from both the previous value and expectations, with the labor force participation rate stable at 62.5%. The decline in the unemployment rate is mainly due to a reduction in the number of permanent job losers and re-entrants, combined with the November JOLTS job openings reaching 8,098,000, with the vacancy rate rising to 4.8%, indicating strong demand in the labor market and overall resilience.
3. Wage growth slightly retreats but remains sticky: The average hourly wage in December saw a year-over-year growth rate of 3.9% and a month-over-month growth rate of 0.3%, both showing slight weakness compared to previous values. In detail, wage growth in the service sector slightly declined, while commodity sector wages rebounded; wages in private education and healthcare services and financial activities grew faster than the service industry average, while retail dragged down overall performance. Although wage stickiness can support personal consumption, it may also delay the cooling process of inflation.
4. Significant impact on financial markets and policies: Strong data led the market to significantly reduce bets on Federal Reserve interest rate cuts in the first half of 2025, with some opinions suggesting that the annual rate cut magnitude may be less than expected. After the data was released, the U.S. dollar index rose to 109.6, with the 1-year and 10-year U.S. Treasury yields rising to 4.25% and 4.77%, respectively; the three major U.S. stock indices all fell more than 1.5%, and the euro and offshore renminbi depreciated against the U.S. dollar.
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