According to the Monthly Employment Situation, released this morning by the Bureau of Labor Statistics, 223,000 jobs were added during December and unemployment edged down to 3.5%. The labor market was expected to cool this past month, with the number of added jobs down from the adjusted 256,000 reported in November. The ADP National Employment Report showed an increase of 235,000 in private payrolls in December. The report noted that, “Hiring was strong across small and medium establishments while large establishments saw a drop in employment of 151,000 jobs.”
Despite steady numbers from the Job Openings and Labor Turnover Summary, which stated that the rate of layoffs remained at .9%, big tech companies continue to lay off workers. Most recently in the news, Salesforce will reportedly discharge 10% of its workforce and close some offices moving into 2023.
Investors have been hoping for a slow down to relieve economic pressure and persuade the Federal Reserve to let up on interest rate hikes. Following historic rate hikes throughout 2022, US stocks closed out a year of sharp losses as the Fed addressed issues of high inflation amid recession fears. The economy is showing mild signs of cooling from the interest rate hikes, but wage increases, and low unemployment are negative economic markers. According to the ADP Report, annual pay rose 7.3% year-over-year in December for private payrolls and this morning’s release reported the average hourly earnings increased 9 cents or 0.3% for all employees on private nonfarm payrolls. That is an average wage increase of 4.6% over the past 12 months.
The Consumer Confidence Index increased for the first time in 2 months from 101.4 in November to 108.3 in December. The Expectations Index increased to 82.4 but remains very near to 80 which is the level historically associated with recession. Ongoing disparity between labor supply and demand paired with increasing wages has been fueling inflation and looks to be carrying over into the New Year.
Leisure and hospitality added 67,000 jobs in December, with food services and drinking places increasing by 26,000 jobs, amusements, gambling and recreation added 25,000 and accommodation added 10,000. The sector continues to add back jobs that were cut during the COVID-19 pandemic but remains below its pre-pandemic level by 932,00 jobs. Health care added 55,000 jobs, construction added 28,000, and social assistance increased 20,000. The average workweek declined to 34.3 hours for private nonfarm payrolls.