The U.S. labor market beat expectations again in December, adding 216,000 jobs to close out the year while the unemployment rate held steady at 3.7%.
Yet the job gains were slower than the same period a year ago, with the three-month average gain dropping to 165,000 a month compared with an average of 284,000 in December 2022, according to Nick Bunker, director of economic research for North America at the Indeed Hiring Lab.
“After entering 2023 with a sonic boom, the US job market is headed into 2024 at a comfortable cruising speed,” Bunker said. “The pace of job creation is strong but not overwhelming, unemployment is low and stable, and job openings are plentiful.”
Bunker noted that just a few sectors – education and health services, government, and leisure and hospitality – accounted for more than 75% of the job growth in December. He cautioned that “turbulence lurks on the edges of the radar” with labor force participation dropping toward year-end while wage growth accelerated.
“While labor demand may still be high, labor supply may be struggling to keep pace,” Bunker said. Nevertheless, the report should alleviate short-term recession fears, he said.
“If there’s any surprise emerging in this report, it’s that the labor market might have more momentum than previously thought,” he said.
The public sector led the way last month with 52,000 jobs, overwhelmingly in local government, according to the Bureau of Labor Statistics.
Health care also saw solid growth with nearly 38,000 jobs added, primarily in ambulatory care and hospitals. Job growth was strong in the sector throughout 2023, adding 55,000 positions a month on average compared with monthly gains of 46,000 in 2022.
Social assistance positions rose by 21,000 in December, with jobs gains averaging 22,000 per month in 2023, slightly more than the 19,000 average monthly increase in 2022.
The leisure and hospitality industry was little changed in December, adding 40,000 positions, with employment in the sector remaining below its pre-pandemic level by 1%, according to the Bureau of Labor Statistics.
The retail sector added 17,000 jobs to end the year, also little changed, with gains offset by a loss of 13,000 positions in department stores. Employment in the industry has struggled to gain speed since recovering from pandemic losses in 2022, according to the data.
Construction also trended upward with 17,000 new positions in December. The sector saw monthly gains of 16,000 in 2023 on average, compared with 22,000 in 2022.
Employment was little changed last month in mining, oil and gas, manufacturing, wholesale trade, information, financial activities, and other services, according to the Bureau of Labor Statistics.
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