Payrolls increased and the unemployment rate dropped to 3.5% in Dec.
According to the latest employment report, the US economy added 223,000 jobs in December 2022. This was lower than the upwardly revised increase of 256,000 jobs in November, but exceeded market expectations of 200,000. The report showed notable job gains in leisure and hospitality, healthcare, construction, and social assistance. In 2022, payroll employment increased by 4.5 million (an average monthly gain of 375,000). The report indicates that hiring is slowing but remains strong as the labor market is returning to normal following the impact of the pandemic. The Fed forecasts that the labor market will remain tight in 2023, but job growth will slow further and the unemployment rate will rise to 4.6%. Many large tech companies (Tesla, Amazon, Microsoft, etc.) have already announced significant layoffs due to rising interest rates, weak consumer demand, and a global economic slowdown.
The average hourly earnings of workers increased at a slightly slower pace in December, rising 0.3% compared to a downwardly revised 0.4% in November. The annual gain in wages also decreased slightly to 4.6% from 4.8% the previous month. After the release of the employment report, markets increased as investors considered the potential positive impact of slowing wage growth on the inflation rates.