The U.S. economy wrapped up 2024 with an impressive show of strength, as employers added 256,000 jobs in December, far surpassing expectations of 155,000. To add to the good news, the unemployment rate dropped to 4.1%, outperforming forecasts and solidifying one of the strongest labour markets in U.S. history.

A Year of Historic Job Growth

Throughout 2024, the U.S. economy created a remarkable 2.2 million jobs, outpacing the 2 million jobs added before the pandemic in 2019. December marked the 48th consecutive month of net job creation, matching the second-longest streak ever recorded. The last time the economy saw a net loss of jobs was back in December 2020.

Impacts on Federal Reserve Policy

The robust job market has cast doubt on further interest rate cuts from the Federal Reserve. After three rate reductions in 2024 to support employment, analysts now expect the Fed to maintain stable rates. With inflation remaining elevated, the central bank is likely to focus on containing price pressures while navigating this period of economic strength.

Rising Yields and Their Ripple Effects

The strong jobs report has pushed bond yields higher globally. The U.S. 10-year Treasury yield, a key benchmark for borrowing costs, reached its highest level since late 2023. Across the Atlantic, U.K. bond yields hit a 25-year peak this week. These rising yields have significant consequences, such as making stocks less attractive to investors and pushing mortgage rates to their highest levels since July.

What Lies Ahead for the Labour Market

Looking forward to 2025, optimism remains high. A LinkedIn survey of 2,000 senior executives revealed that 77% expect hiring to remain stable or grow significantly in the coming year. With such strong momentum, the U.S. labour market is poised for yet another record-breaking year.