Unemployment was hovering around a four-year high in the United States as the economy added 50,000 jobs last month, below expectations, according to the latest government jobs report released Friday.
The Bureau of Labor Statistics report revealed that employment was up in the food services, health care, and social assistance sectors, but retail employment fell.
While the unemployment rate fell month-on-month from 4.6 percent to 4.4 percent, it remains at levels the job market hasn’t seen in more than four years, when the jobless rate was at 4.5 percent in October 2021.
The report brings mixed news. On the positive side, economists were encouraged by the drop in the unemployment rate, which had risen in the previous four straight reports. However, the 50,000 jobs the economy added were less than the 70,000 that economists expected.
“[It’s] obviously disappointing in the top-line [jobs] growth – 50,000 versus the expected 70,000, which was already sort of soft,” former Federal Reserve Vice Chairman Roger Ferguson told CNBC’s Squawk Box on Friday. “On the other hand, unemployment rate moving in a more positive direction [is a win] for those who want to see a healthy economy.”
The jobs numbers tend to play an important role in the Federal Reserve’s interest rate decisions. The Fed is meeting later this month and, on the heels of Friday’s report, Ferguson believes the right call is to hold off on any rate changes.
“Against this kind of mixed report, if I were sitting at [the Fed meeting] in January, I’d take a pause [on rate changes]and wait and see and get a little bit more clarity.”
The job market’s sluggish growth is due to several factors, experts point out.
President Donald Trump’s unpredictable tariffs, an aging workforce, a decline in immigration, and the rise of artificial intelligence may be contributing to employment struggles, the Federal Reserve Bank of Kansas noted in December.
“Several changes are buffeting the economy and likely affecting the pace of job growth, including rapid developments in AI as well as an aging demographic and reductions in immigration,” the bank said.
“Recent increases in tariff rates could also affect job growth. In principle, tariffs can increase or decrease labor demand.”
Payroll firm ADP’s research division pointed out that the number of people looking for new jobs has decreased over the past few years, and new hires have fallen more than a percentage point in big industries like health care, and hospitality and leisure, according to payroll firm ADP’s research division. Annual gross pay for new hires has been rising slowly, theoretically making new jobs less appealing to candidates, in some cases, ADP noted.