The U.S. added 223,000 jobs in December, surpassing investor expectations by roughly 20,000 and cooling from the roughly 270,000 jobs added in November, according to the Bureau of Labor Statistics Friday.
Although December’s jobs report showed signs of a hiring slowdown, the most recent data from the BLS suggested that demand for labor continues to run red-hot, with the U.S. having 10.5 million job openings in November, according to The Wall Street Journal. The Federal Reserve — which has been raising interest rates in a bid to blunt economic demand and reduce inflation — would likely need to have seen a more aggressive slowdown than what was reported in these two most recent reports to opt against another 0.5-percentage-point hike at its next meeting early February, according to CNBC. (RELATED: Private Job Growth Smashes Expectations As Labor Market Stays Stubbornly Hot)
“I don’t think things have slowed all that much,” Michael Gapen, chief U.S. economist at Bank of America, told CNBC. Gapen, who predicted that roughly 215,000 jobs were added in December, noted that this prediction was still “twice as much job growth” as the Fed wants.
WASHINGTON, DC – DECEMBER 14: Federal Reserve Board Chairman Jerome Powell speaks during a news conference after a Federal Open Market Committee meeting on December 14, 2022 in Washington, DC. (Photo by Alex Wong/Getty Images)
The unemployment rate nudged down to at 3.5%, while average hourly wage growth declined from 0.6% in November to 0.3% in December on a monthly basis, according to the Bureau of Labor Statistics. Fed Chair Jerome Powell said in a Dec. 14 press conference that the Fed anticipates that the unemployment rate will likely rise to 4.6% by the end of 2023 as a consequence of its anti-inflationary poilcy, but stressed that this, alongisde slowing wage growth, was necessary to combat inflation.
“Although job vacancies have moved below their highs and the pace of job gains has slowed from earlier in the year, the labor market continues to be out of balance, with demand substantially exceeding the supply of available workers,” said Powell. “[Federal Open Market Commission] participants expect supply and demand conditions in the labor market to come into better balance over time, easing upward pressures on wages and prices.”
The BLS report comes one day after a private payroll firm ADP estimated that businesses added roughly 235,000 jobs in December, primarily in customer-facing industries. Annualized pay growth in the private sector fell to just 7.3% for those who remained in their jobs, the lowest level seen since March 2022.
In total in 2022, employers added roughly 4.5 million jobs, according to the WSJ.
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