US Jobs Drop Marks December, Moderate Expectations of Fed Rate Cuts in 2025

• December sees sharp drop in US job openings.
• Labor market reflects stability, according to the Fed.
• Expectations tempered for Federal Reserve rate cuts.

In December, the labor market in the United States recorded a significant reduction in the number of available jobs, reaching the lowest level since September. This movement surprised analysts, who did not foresee such a significant drop, highlighting a possible sign of a slowdown in the economy.

In the U.S. stock market today, the Dow Jones Industrial Average (^DJI) traded above breakeven, while the SP 500 (^GSPC) advanced about 0,5%. Meanwhile, the technology-focused Nasdaq Composite (^IXIC) rose more than 0,1% after a day of losses for stocks.

At the time of publication, the price of Bitcoin was quoted at US$99.300 with a drop of 0,3% in the last 24 hours.

According to the latest data from the Bureau of Labor Statistics, released Tuesday, the number of job openings at the end of December was 7,6 million, marking a significant decrease from the 8,15 million registered in November. This decline is the sharpest since October 2023, indicating a changing landscape in the labor market.

The report also revised November’s data upward, which initially showed 8,01 million jobs, down from 8 million. Nancy Vanden Houten, chief U.S. economist at Oxford Economics, commented on the report, saying: “December’s data painted a familiar picture of the labor market, with a low pace of layoffs keeping net job growth positive despite a slow pace of hiring.”

Additionally, according to Yahoo Finance, the Job Openings and Labor Turnover Survey (JOLTS) indicated that there were 5,46 million new hires during the month, a slight increase from 5,37 million in November. The hiring rate held steady at 3,4% for the third consecutive month. The layoff rate, which reflects worker confidence, also remained unchanged at 2% in December, remaining below pre-pandemic levels.

In a recent press conference, Federal Reserve Chairman Jerome Powell described the labor market as “broadly stable,” which contributed to the central bank’s decision to pause interest rate cuts.

Vanden Houten reinforced the Fed’s outlook, indicating that “The December JOLTS report is consistent with the Fed’s view that the labor market is healthy enough to tolerate a more cautious approach to rate cuts, particularly given the uncertainty surrounding tariff policy.” She further revealed: “We will remove a March rate cut from our February baseline forecast.”

As of Tuesday morning, the market was expecting a less than 50% chance that the Fed would cut interest rates by at least its June meeting, according to the CME FedWatch tool. This week, Investors await more important labor market reports, culminating with the January jobs report on Friday, which is expected to show an increase of 170.000 jobs, down from 256.000 in December, while the unemployment rate is expected to remain at 4,1%.