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Key Takeaways:

• Nonfarm payroll employment rose by 256,000 in December, the strongest gain in nine months, according to the Bureau of Labor Statistics (BLS). Revisions to prior months were minimal. Job gains were fairly broad-based, with health care (+46,000), retail trade (+43,000), government (+33,000), and leisure and hospitality (+43,000) all posting solid gains. Average hourly earnings increased 0.3 percent, a slowdown compared to the prior two months, and were up 3.9 percent compared to a year ago. The unemployment rate declined one-tenth to 4.1 percent; it has remained either 4.1 or 4.2 percent for seven consecutive months.
• The Job Openings and Labor Turnover Survey (JOLTS) showed job openings rose by 259,000 in November to 8.1 million, the highest level since May 2024, according to the BLS. The quits rate was down two-tenths to 1.9 percent, though October's data was revised upward. Layoffs and discharges moved up modestly to 1.8 million, about the same level as was typical in 2019.
• Consumer (non-mortgage) credit outstanding declined by $7.5 billion in November, according to the Federal Reserve. Revolving credit outstanding (largely credit cards) declined 13.7 billion following a 15.2 billion jump the month prior. Nonrevolving credit outstanding (largely student and auto loans) increased by $6.2 billion.
• The real goods U.S. trade deficit widened by $4.7 billion in November, according to the Census Bureau. Real exports were up 3.4 percent after a 3.9 percent decline the month prior, while real imports jumped 4.1 percent following a 5.5 percent decline in October. Both figures were affected by the resolution of port strikes.

Forecast Impact:

Payroll gains in December were above both consensus and our expectations. A broad range of indicators suggest that the labor market cooled throughout 2024, though this report and the increase in job openings in November suggest that conditions may have firmed to end the year. Still, based on preliminary data, we expect the annual benchmark process to the establishment survey next month will show a net downward revision to payroll employment over the past year and a half. However, we do not yet know if the revision will affect the recent acceleration in job gains or whether revisions will be concentrated in earlier periods. For now, this report is likely to cause a near-term upward revision to our employment forecast.

The large decline in revolving credit is worth noting as a downside risk to our forecast, though the November drop may just be reversing part of the surge in October. For now, we continue to expect consumption growth to remain strong in the near term.

Nathaniel Drake
Economic and Strategic Research Group
January 10, 2025

Opinions, analyses, estimates, forecasts, beliefs, and other views of Fannie Mae's Economic & Strategic Research (ESR) Group included in these materials should not be construed as indicating Fannie Mae's business prospects or expected results, are based on a number of assumptions, and are subject to change without notice. How this information affects Fannie Mae will depend on many factors. Although the ESR Group bases its opinions, analyses, estimates, forecasts, beliefs, and other views on information it considers reliable, it does not guarantee that the information provided in these materials is accurate, current, or suitable for any particular purpose. Changes in the assumptions or the information underlying these views could produce materially different results. The analyses, opinions, estimates, forecasts, beliefs, and other views published by the ESR Group represent the views of that group as of the date indicated and do not necessarily represent the views of Fannie Mae or its management.

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