The U.S. added 216,000 jobs in December, and the unemployment rate was unchanged at 3.7%, according to the latest Employment Situation Summary from the U.S. Bureau of Labor Statistics.
Along with the unemployment rate, the number of unemployed persons was unchanged at 6.3 million. These numbers are higher than what was seen in December 2022, when the unemployment rate was 3.5% and the number of unemployed persons was 5.7 million.
In addition, the analysis reported that employment gains were mostly in government, healthcare, social assistance and construction. Transportation and warehousing, on the other hand, lost jobs.
Key findings:
- Government employment increased by 52,000. Employment continued to trend up in local government (+37,000) and federal government (+7,000) over the month. Government added an average of 56,000 jobs per month in 2023, more than double the average of 23,000 in 2022.
- Healthcare added 38,000 jobs. Over the month, job gains continued in ambulatory healthcare services (+19,000) and hospitals (+15,000). Job growth in healthcare averaged 55,000 per month in 2023, compared with the 2022 average of 46,000.
- Employment in social assistance increased by 21,000, mostly in individual and family services (+17,000). Social assistance employment rose by an average of 22,000 per month in 2023, little different from the average increase of 19,000 per month in 2022.
- Construction employment trended up by 17,000 jobs. Nonresidential building construction specifically saw an increase of 8,000 jobs. Construction added an average of 16,000 jobs per month in 2023, little different than the 2022 average of 22,000.
- Transportation and warehousing lost 23,000 jobs. A job loss in couriers and messengers (-32,000) was partially offset by a gain in air transportation (+4,000). Employment in transportation and warehousing has declined by 100,000 since a peak in October 2022.
- Employment showed little change over the month in other major industries, including: leisure and hospitality; retail trade; professional and business services; mining, quarrying, and oil and gas extraction; manufacturing; wholesale trade; information; financial activities; and other services.
- Average hourly earnings for all employees on private nonfarm payrolls rose by 0.4%, to $34.27. Over the past 12 months, average hourly earnings have increased by 4.1%. Average hourly earnings of private-sector production and nonsupervisory employees rose by 0.3%, to $29.42.
- The laborforce participation rate was 62.5%, a 0.3 percentage point from last month.
Key Takeaways:
Dr. Selma Hepp, chief economist at CoreLogic, commented:
“The good news is that employers are still hiring, but that rate is beginning to show signs of slowing down. Jobs in tourism and other service industry sectors are driving a large portion of the hiring numbers, which will remain positive until the U.S. consumer begins to lower their household spending. Skipping dinner at restaurants is an easy way for families to tighten their belts, for example, so we are watching out for an economic slowdown once that begins to happen.”
Realtor.com® Chief Economist Danielle Hale commented:
“As the Fed gathers in late January, today’s labor report and next week’s inflation data will be key inputs in assessing progress toward its dual mandate of full employment and price stability. At its December meeting, the Fed held rates steady and noted the significant progress to date on inflation. Furthermore, its projections showed that many members expect rate cuts to begin in 2024. The market is currently expecting a rate cut by March, and investors will be looking for clues about the timing of any rate reductions. The labor market has weathered higher rates rather well, giving the Fed more leeway to prioritize inflation fighting.
“Average hourly earnings for private employees grew by 4.1% in the year ending in December 2023. Earnings have outpaced inflation since May, bringing real growth to workers’ spending power. Unfortunately, the cost of buying a home has still outpaced wage growth, rising 7.9% in November, and we’re likely to see additional gains when December data is released next week. Fortunately for homebuyers, realtor.com®’s 2024 Housing Forecast anticipates the beginning of a turnaround in housing affordability. In fact, tumbling mortgage rates, which have dropped more than a percentage point from their October peaks, have already improved shopper’s buying power, setting the housing market up for a relatively active spring season.”
MBA SVP and Chief Economist Mike Fratantoni commented:
“Job openings, the pace of hiring and the quits rate are all trending down, but layoffs and initial claims for unemployment insurance are not moving higher. Together, these data indicate a market where employers are slower to take on new employees, but are not seeing enough weakness to dramatically cut payrolls.
Wage growth at 4.1% over the past year remains brisk, but we expect this will slow in the year ahead, supporting further reductions in inflation.
In summary, this report shows a job market little changed from November. We expect that the economy will slow down in 2024, and this will likely lead to increases in the unemployment rate. In terms of implications for the housing market, these data are likely to keep interest rates from falling further at this point, but we expect mortgage rates to drift down over the year as the economy slows.”
