The U.S. economy added jobs faster than expected in December as Federal Reserve policymakers closely monitor the labor market’s strength ahead of their meeting later this month.

The Labor Department reported Friday that employers added 256,000 jobs in December, well above LSEG economists’ estimate.

The unemployment rate was 4.1%, slightly below economists’ expectations.

The number of jobs created in the previous two months were both revised, with the number of jobs created in October increasing by 7,000 from 36,000 to 43,000; while November was revised downwards by 15,000 from a gain of 227,000 to 212,000. Combined, 8,000 fewer jobs were created in these two months than previously reported.

Private sector payroll created 223,000 jobs in December, much more than the 135,000 estimated by LSEG economists.

Manufacturing employment fell by 13,000 in December, a surprise decline as economists forecast a gain of 5,000 jobs.

Wage growth was broadly in line with expectations, with average earnings rising 0.3% month-on-month and 3.9% year-on-year.

Healthcare added 46,000 jobs in December, with gains concentrated in home health services (+15,000), nursing and care facilities (+14,000) and hospitals (+12,000). Healthcare added an average of 57,000 jobs per month in 2024, which is the same as the monthly average in 2023.

The retail sector added 43,000 jobs in December after losing 29,000 jobs in November. Last month’s gains were concentrated in apparel, footwear and jewelry retail (+23,000), general merchandise (+13,000) and health and personal care (+7,000). Retail lost jobs in the building materials and gardening equipment industries (-11,000).

The government added 33,000 jobs in December, slightly less than the 2024 monthly average of 37,000 jobs per month. Last year, growth in public sector jobs was slower than in 2023, when the monthly average gain was 59,000 jobs.

The number of social assistance workers increased by 23,000 last month, the majority of which was in individual and family services (+17,000). The sector added an average of 18,000 new jobs per month in 2024, slightly less than the average of 23,000 in 2023.

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