If you’ve ever gotten car sick during a long drive, you know the relief of finally getting to your destination. In some ways, the latest jobs report from the Bureau of Labor Statistics is offering similar relief.
Friday’s unexpectedly positive report, encompassing employment data for December, marked a cautiously optimistic end to a tumultuous year for the labor market. At the same time, as plenty of uncertainty awaits employers and their hiring strategies in 2025, this latest data may be more like pulling into a rest stop than arriving at the end of a bumpy ride. Let’s dive into the numbers.
Finishing strong. Despite slowing job growth, the labor market managed to evade recession fears last year.
“The strong jobs growth we saw today, along with the drop in the unemployment rate, affirm that the job market is cooling gradually rather than slowing more dramatically,” Daniel Zhao, Glassdoor’s senior economist, told HR Brew.
Employers added 256,000 jobs in December, beating out economists’ expectations. Overall, payroll employment rose by 2.2 million in 2024, around 800,000 less than the 3 million added in 2023. Unemployment fell to 4.1%, from 4.2% in November. While jobless rates increased 0.3% year-over-year, it has largely remained unchanged at 4.1% or 4.2% since June last year.
Healthcare added 46,000 jobs in December, marking the largest industry job growth last month. These gains were particularly bolstered by home healthcare services and nursing and residential care facilities, which last month added 15,200 and 14,000 jobs, respectively.
Retail trade added 43,000 jobs, marking a rebound after losing 29,000 jobs in November. However, building material and garden equipment and supplies dealers—a subsector of retail trade—lost 11,400 jobs. Government payroll increased by 33,000.
“It’s just indicative of the resilience the job market has shown over the last couple quarters,” Rajesh Namboothiry, SVP at Manpower US, said of December’s employment data. “You would expect some of [those] numbers with retail and hospitality, but government was strong too, and so was healthcare. So overall, my read is: a strong close to the year.”
Though not everything was rosy for all industries. Manufacturing lost 13,000 jobs, the most of any industry last month, after a brief rebound in November adding 25,000 jobs. In total, manufacturing lost 87,000 jobs year over year. Similarly, white collar industries including professional business services and information continued to see sluggish growth in December.
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Looking ahead. Despite a cautiously optimistic end to 2024, the labor market continues to face uncertainty in the year ahead, particularly with the change in administrations and potential policy changes.
Labor market growth could continue to slow if tariffs—which the Trump administration says it plans to impose—create more inflation, Namboothiry said. Similarly, if immigration, which has played a significant role in the labor market’s growth in recent years, slows due to new Trump policies, there could be labor shortages, producing more competition for talent for employers and potentially increasing costs with increased wages and benefits, Zhao said.
Some industries that saw the highest growth in 2024 could also be impacted. Healthcare, for example, could see job growth decline in 2025 if funding cuts to Medicaid programs lead to less healthcare spending, Zhao noted.
“There’s a lot of uncertainty there about [which] policies will actually be enacted and how quickly,” he said. “But if the labor force isn’t growing, then employers are having to compete for the same workers, and that can drive up worker demands for higher pay, more benefits.”
Despite these uncertainties, there are ways HR leaders can strategically get ahead on their talent attraction and retention for 2025.
While retaining talent should remain employers’ primary focus, Namboothiry said, they should also prioritize strategizing their hiring plans for the medium- and long-term. HR and recruiting leaders could also consider what the next two to three quarters might demand of talent, including any skills and upskilling and reskilling programs that they will need. In planning for the next few years, HR leaders can consider how new technology and automation will shift talent strategy, as well as how demands from talent might change.
“There’s definitely that cautious optimism that employers are experiencing and they’re talking to us about, so I would just say, start to plan ahead,” Namboothiry said.