December Jobs Report Commentary from MBA's Mike Fratantoni

The following is MBA SVP and Chief Economist Mike Fratantoni’s reaction to this morning’s U.S. Bureau of Labor Statistics report on employment conditions in December.  

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“The job market remained relatively strong in December, with growth in payrolls of 216,000 – just below the monthly average of 225,000 in 2023 – and the unemployment rate unchanged at 3.7%. Payroll gains for October and November were revised down by 71,000, countering the somewhat faster pace of job growth anticipated in December.  As in prior months, the bulk of the job gains were in just a few sectors, with a 52,000 increase in government employment leading the pack.  At the same time, businesses are hiring fewer temp workers, down 33,000 for the month and down 346,000 from its peak – a sign that businesses do not need to expand their production capacity in this market.

“Job openings, the pace of hiring, and the quits rate are all trending down, but layoffs and initial claims for unemployment insurance are not moving higher. Together, these data indicate a market where employers are slower to take on new employees, but are not seeing enough weakness to dramatically cut payrolls. 

“Wage growth at 4.1% over the past year remains brisk, but we expect this will slow in the year ahead, supporting further reductions in inflation.

“In summary, this report shows a job market little changed from November.  We expect that the economy will slow down in 2024, and this will likely lead to increases in the unemployment rate. In terms of implications for the housing market, these data are likely to keep interest rates from falling further at this point, but we expect mortgage rates to drift down over the year as the economy slows.”