Yahoo Finance December jobs report: US economy adds 216,000 jobs, shocking Wall Street Read full article 2.5k Josh Schafer · Reporter January 5, 2024 at 3:53 PM · 3 min read
The US economy ended 2023 on a high note.
The labor market added 216,000 jobs in the month of December, up from 173,000 the previous month, surprising Wall Street once again to close out 2023.Economists surveyed by Bloomberg had expected 175,000.
Data from the Bureau of Labor Statistics released on Friday showed the unemployment rate was 3.7% for the month, flat from the rate seen in November.Economists had expected the unemployment rate to tick higher to 3.8%.
Investors were closely watching the report for signs of whether the Federal Reserve can achieve a so-called soft landing, where inflation retreats to the Fed’s 2% goal without a recession.That could impact the Fed’s timeline for cutting rates this year.
Key to the soft-landing goal is a normalization of a red-hot, pandemic-era labor market.
Nela Richardson, ADP chief economist, told Yahoo Finance Live that the Fed will likely take notice of the bump-up in job additions in December.”What we’re seeing with companies is insistent hiring, especially small businesses,” Richardson said.
The surprise strength in the labor market helped consumer wallets too.
Wages, a closely watched indicator for inflation and a gauge of how much leverage workers have in the labor market, increased 0.4% on a monthly basis and 4.1% over last year; economists had expected wages to rise 0.3% over last month and 3.9% over last year.
Some key metrics did decline, though.The labor force participation rate ticked lower to 62.5%, down from 62.8% the month prior, while average weekly hours worked moved down slightly from 34.4 to 34.3.
“There is a lot of noise in the data, but we continue to expect that there will be enough evidence of a further loosening in labor market conditions and a decline in inflation more broadly to allow the Fed to begin cutting rates in May,” Nancy Vanden Houten, lead US economist at Oxford Economics, said in a note.
The largest jobs increases in Friday’s report were seen in government, where 52,000 jobs were added.
Meanwhile, healthcare added 38,000 jobs.
Story continues On the other end, the biggest losses were seen transportation and warehousing, which lost 23,000 jobs, while social assistance, lost 21,000.
A group of construction workers holds a meeting about an underground pipe repair on Oct.13, 2023, in New York City.(Robert Nickelsberg/Getty Images) (Robert Nickelsberg via Getty Images) Data released earlier this week showed signs the labor market is coming into a better balance between worker supply and demand.On Wednesday, the latest Job Openings and Labor Turnover Survey revealed job openings in November hit their lowest level since March 2021.
Additional labor market data out Thursday from ADP showed private payrolls increased more than expected last month while wage growth continued to slow.Specifically, ADP noted that the decline in wage gains is a welcome sign in the fight against inflation, with Richardson saying in the press release that “any risk of a wage-price spiral has all but disappeared.”
Josh Schafer is a reporter for Yahoo Finance.
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