Quick Facts:
- Total nonfarm payroll employment increased by 223,000 in December.
- The unemployment edges down to 3.5 percent.
- Notable job gains occurred in leisure and hospitality, health care, construction, and social assistance.
- The employment-population ratio increased by 0.2 percentage points over the month to 60.1 percent and the labor force participation rate was little changed at 62.3 percent.
- Long-term unemployed (those jobless for 27 + weeks) declined by 146,000 to 1.1 million in December. This measure is down from 2.0 million a year earlier.
Looking Forward:
- Hiring slowed modestly in December as employers added 223,000 jobs to close out an otherwise booming year, possibly foreshadowing the deeper pullback and recession that many economists expect in 2023.
- The softer components of the jobs report were backed up by a surprisingly weak reading from the Institute of Supply Management’s services index, which tumbled to a contractionary reading below 50 for the first time since May 2020.
- Despite solid hiring, the aggregate number of hours worked economy wide slipped 0.1% in December after a 0.2% drop in November. That reflects a shorter average workweek, which fell to 34.3 hours last month from 34.4 hours in November and 34.5 in October. Temp jobs fell 35,000, the third straight monthly decline, which economists see as a potential leading indicator of broader labor market weakness. Construction jobs rose 28,000 and manufacturing jobs by 8,000. Retailers added 9,000 jobs. Leisure and hospitality sector employment rose by 67,000. Health care and social assistance jobs grew by 74,000.
- Over the past three months, wage growth has run at a 4.1% annualized pace, noted UBS economist Jonathan Pingle. Wage growth is key to the Fed outlook. Federal Reserve chair Jerome Powell has said wage growth of 3.5% would be consistent with the Fed’s 2% inflation target.
Source: U.S. Bureau of Labor Statistics
