The US economy added 223,000 jobs in December
The U.S. economy added 223,000 jobs in December, capping an extraordinary year of job growth and the second-best year for the labor market since 1939, according to the Bureau of Labor Statistics’ monthly report.
The unemployment rate has fallen to a record low 3.5% compared to a revised 3.6% in November.
According to Refinitiv, economists had expected 200,000 jobs to be created in the final month of the year. The total number of jobs in December was down from 256,000 jobs added in November.
Including last month’s gains, which are subject to revision, the economy added about 4.5 million jobs in 2022. That’s the second-highest rate since 6.7 million jobs added in 2021 — a boomerang from 2020’s 9.3 million job losses.
The labor market slowed down in 2022 compared to the previous year. December’s employment figures represent the weakest monthly gains in two years.
These final gains will come later The Federal Reserve is months away from a massive interest rate hike aimed at calming the economy after inflation hit its highest level since the 1980s last year. These efforts, so far, have been largely untapped.
This means the Fed is looking for a significantly softer and more flexible labor market by 2023, including increased labor market participation, better matching of job seekers with job openings and growth rates. minimum wage.
“This is the best report that could have been expected given the still very hot US labor market,” said Joe Brusuelas, senior economist and head of RSM US.
Wall Street responded positively to Friday’s jobs data, with the Dow Jones up nearly 500 points by mid-morning, largely in response to slowing wage growth. Average hourly wages rose 0.3% month-over-month and 4.6% year-over-year. This compares with a 0.4% increase in November and a 4.8% year-on-year increase.
The December report showed that the labor force participation rate, an estimate of the labor force and those looking for work, fell from 62.2% to 62.3%.
The labor force participation rate peaked at 67.3% in early 2000 and fell to 63.3% a month before the pandemic — a decline due to changing demographics and aging baby boomers. The participation rate has not returned to pre-pandemic levels, which has frustrated economists and the Fed, and contributed to an imbalance between supply and demand for workers.
“The labor market is moving in the right direction for the Federal Reserve according to the December jobs report, but it’s not there yet,” said Gus Faucher, senior economist at PNC Financial Services. “Job growth is slowing to a steady pace and wage growth is slowing as labor market demand moderates somewhat.”
However, if job growth is well above pre-pandemic levels, as job growth averaged 164,000 in 2019 and the unemployment rate fell At a 50-year low, there are few signs that labor force growth will be enough to help cool the labor market, he said.
Some of the biggest monthly gains were in industries like leisure and hospitality, healthcare, lodging and food services, which have been hit hard by the pandemic. There have been significant monthly job losses in tech and interest rate-sensitive sectors, which are being balanced as consumer spending shifts to services, which have grown during the pandemic.
Industries such as information, finance, and professional and business services lost jobs between November and December.
The losses in areas such as professional and business services could be the result of waves of mass layoffs affecting the tech industry, said Ken Kim, senior economist at KPMG.
“We’re seeing a little bit of spread in other areas,” he said.
In addition to Friday’s strong employment numbers, other employment data released this week continue to point to a healthy labor market. Wednesday’s Job Openings and Labor Turnover (JOLTS) report showed 10.5 million job openings were steady in November. It also showed that layoffs, layoffs and hiring showed no major signs of slowing that month.
The ADP private sector employment report released on Thursday also showed a steady labor market, with the private sector adding 235,000 jobs in December, beating expectations by 150,000.
Thursday’s jobless claims fell 21,000 to 204,000 in the week ended Nov. 26, while ongoing claims fell to 1.69 million from 1.72 million to 1.61 million.
— CNN’s Matt Egan contributed to this report.
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