U.S. Job Growth Surprises Analysts
(WASHINGTON) - The surge in job creation in the United States unexpectedly shot up in December, and the unemployment rate dropped to 4.1%, indicating that the labor market ended the year on solid footing, reinforcing the Federal Reserve's cautious stance on potential interest rate cuts throughout this year. According to the Department of Labor, non-farm payrolls added 256,000 jobs last month, following a gain of 212,000 in November.
Economists surveyed by Reuters had estimated job growth of 160,000 in the payrolls, after an increase of 227,000 in November, with projections ranging from 120,000 to 200,000 additional jobs. Hiring has shown a slowdown due to the significant interest rate hikes imposed by the U.S. central bank during 2022 and 2023. However, the strong trajectory of the labor market, marked by historically low layoffs, is supporting the economy and encouraging consumer spending thanks to higher wages. The economy is growing at a remarkably rate above the 1.8% that the Federal Reserve considers the growth rate that doesn’t generate inflation. Nonetheless, concerns are arising over President-elect Donald Trump's promises to apply or significantly increase tariffs on imports and deport millions of undocumented immigrants, which could slow down this momentum. These worries are reflected in the minutes from the Federal Reserve's monetary policy meeting on December 17 and 18, released on Wednesday, which noted that "most participants indicated that (...) the Committee could take a cautious approach in considering" new cuts. On the other hand, average hourly wages increased by 0.3% last month, following a 0.4% rise in November. Over the course of the 12 months leading up to December, wages grew by 3.9%, down from 4.0% in November.
An additional comment: The strength of the labor market in the United States is a positive indicator for the economy, but it also raises questions about the Federal Reserve's ability to balance growth with inflation. Monetary policies need to be closely monitored, as their adjustments can significantly impact not only the U.S. economy but also the Mexican economy, given the strong interconnection between the two countries. Greater uncertainty in the U.S. could have repercussions on investment flows and trade with Mexico.
