According to the U.S. Bureau of Labor Statistics monthly employment report, the U.S. economy added 223,000 jobs in December, capping a year of staggering job growth in a record dating back to 1939 and a 2.5% increase for the labor market. marked the second best year.
Unemployment is at an all-time low Up 3.5% from November’s revised 3.6%.
According to Refinitiv, economists expected 200,000 jobs to be added in the last month of the year. Total employment in December is below the revised down 256,000 jobs added in November.
Including last month’s increase subject to revision, the economy added about 4.5 million jobs in 2022. That’s the second-highest total ever, behind the 6.7 million jobs added in 2021, and a boomerang from her 9.3 million job losses in 2020.
The labor market has slowed in 2022 compared to the previous year’s decline. Total employment figures for December represent the lowest monthly increase in two years.
These latest gains are: After inflation hit its highest level since the 1980s last year, the Federal Reserve has followed a jumbo month of rising interest rates in an attempt to cool the economy. These efforts have so far remained largely elusive.
That means the Fed is looking for a significant softening and easing in the labor market as we enter 2023. In particular, we see an increase in labor force participation, an adjustment in job seekers and open positions, and a decline in wage growth.
RSM US principal and chief economist Joe Brusuelas said: “This is the best report we can expect given that the US labor market is still very hot.
Wall Street reacted positively to Friday’s jobs report, with the Dow Jones Industrial Average up nearly 500 points by mid-morning. This is largely a response to slowing wage growth. Average hourly wages increased by 0.3% month-on-month, or 4.6% for the year. This compares with a 0.4% month-on-month increase in November and a 4.8% increase for the year.
The labor force participation rate, an estimate of the active workforce and those looking for work, rose from 62.2% to 62.3%, according to a December report.
The labor force participation rate has declined since peaking at 67.3% in early 2000, largely due to demographic changes and an aging baby boomer generation, to 63.3% in the month before the pandemic hit. had dropped to Participation rates have not returned to pre-pandemic levels, troubling economists and the Fed, while also contributing to imbalances in labor demand and supply.
“December’s employment report shows the labor market is heading in the right direction for the Fed, but we’re not there yet,” Gus Faucher, senior economist at PNC Financial Services, said in a statement. “Job growth is slowing to a more sustainable pace, and wage growth is slowing as job market demand slows somewhat.”
But as job growth is well above pre-pandemic levels, Job growth averaged 164,000 in 2019 and the unemployment rate was It’s the lowest level in 50 years, and there’s little indication that the labor force will grow enough to cool the job market, he said.
The biggest monthly gains were in industries such as Leisure & Hospitality, Healthcare and Accommodation & Food Service, all of which were hit hard by the pandemic. There are also notable monthly job losses in technology and interest rate sensitive sectors that surged during the pandemic and are now rebalancing as consumers shift spending towards services.
Industries such as information, finance, professional services, and business services will lose their jobs in November and December.
Ken Kim, senior economist at KPMG, said the losses seen in areas such as professional and business services are likely due to the wave of mass layoffs that has hit the tech industry.
“We’re seeing a little bit of spread to other regions,” he said.
In addition to Friday’s strong employment numbers, several other employment data released this week continue to reflect a healthy labor market. Job openings and turnover survey (JOLTS) report on Wednesday showed he had steady job openings at 10.5 million in November. It also showed that layoffs, layoffs, and hiring for the month didn’t really show any major signs of cooling.
Thursday’s ADP private sector jobs report also showed a strong labor market, with 235,000 jobs added in the private sector during December, well above expectations of 150,000.
Also, Thursday’s weekly unemployment claims fell from 21,000 to 204,000 in the week ending Nov. 26, while continuing claims fell to 1.69 million from 1.72 million to 1.61 million.
—CNN’s Matt Egan contributed to this report.