Economic Outlook for December 2024

Purchasing Managers Index (PMI):

The ISM Manufacturing PMI for December improved to 48.4 from 47.7 in November, signaling a slower contraction in the manufacturing sector. Resilient new orders and improved production dynamics contributed to the uptick, though challenges remain due to weaker global demand. The ISM Services PMI remained strong at 56.0, supported by robust consumer spending in retail and leisure services.

Unemployment Rate:

The unemployment rate remained unchanged at 4.1% in December. Weekly unemployment claims averaged 224K, showing stability in the labor market. However, layoffs in manufacturing highlight continued pressure in the industrial sector.

Non-Farm Payroll:

Job creation slowed significantly, with only 36,000 jobs added in December, compared to 227,000 in November. The deceleration in hiring was most pronounced in manufacturing and retail. Average hourly earnings maintained steady growth at 0.4% month-over-month, providing modest support for consumer purchasing power.

Market Outlook:

Core inflation remained steady, with a 0.3% month-over-month rise, and the annual CPI moderated to 2.6%, signaling controlled inflation. The Federal Reserve maintained the Federal Funds Rate at 4.75%, citing progress in inflation management. Consumer confidence remained resilient, bolstered by strong service sector performance.

The overall economic outlook for December 2024 reflects mixed signals, with strength in services and wage growth countered by ongoing weaknesses in manufacturing and slower job creation. The Federal Reserve’s stable monetary policy provides a supportive backdrop for continued economic growth into early 2025.