In one other indication of the resilience of the labor market, employers added 223,000 jobs in December, while the unemployment fell to three.5%, the Labor Department reported on Friday.
Nonetheless, wage growth slowed somewhat to a 4.6% annual rate, down from 5.1% a month earlier.
Strong employment gains were seen within the leisure and hospitality industries, in addition to in health care and, surprisingly, in construction.
The federal government report follows Thursday’s survey from private payroll firm ADP, showing 235,000 jobs created in December as service sector hiring got here in strong.
The strength of the labor market, mockingly, is seen as bad news by the Federal Reserve because it tries to bring inflation down from the 9.1% annual rate it reached in the midst of last 12 months. ADP did find a bit cooling off of wages, with compensation rising at a 7.3% annual rate, down from 7.5% in November. But that continues to be inconsistent with the Fed’s goal of reaching a mean annual rate of two% inflation.
“The Fed is seeking to substantially weaken the labor market, searching for lower inflation, and based on the meeting notes released yesterday, goes to maintain raising rates until that happens,” Brad McMillan, chief investment officer for Commonwealth Financial Network, wrote ahead of the roles report on Thursday.
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“The entire signs are that the roles market will weaken significantly. However the query stays, is the job market actually going to weaken?” McMillan added.
Jim McCoy, senior vice chairman of enterprise solutions at ManpowerGroup, says the firm’s most up-to-date quarterly survey of employers found only a “slight drop” in hiring intentions for 2023.
“The fact is we haven’t seen a giant drop,” McCoy says, adding that some firms that were priced out of the marketplace for in-demand staff equivalent to IT employees are actually finding they will fill open positions.
“A number of the headiness that was there in Q1 and Q2 of 2022, it’s not there as much,” he adds. “We’re principally seeing bubbles fixing themselves.”
As for compensation trends, McCoy says there was “some moderation” in the very best demand jobs, equivalent to travel nurses.
Other readings on the job market, equivalent to weekly unemployment claims and job openings, have also shown the labor market’s resilience. At the top of November, for instance, 10.5 million jobs were open, roughly 1.7 per available employee.
And while the ADP report did see large employers cutting staff, small and medium-sized firms added employees. Layoffs at well-known tech firms like Amazon, Meta and Tesla have grabbed headlines, but overall reductions among the many workforce are still low.
“Layoffs of white-collar staff, especially within the tech industry, have attracted plenty of attention, however the losses have had little impact on the general labor market,” said Odeta Kushi, deputy chief economist at title insurer First American. “The data sector, which incorporates many tech jobs, makes up lower than 2% of total nonfarm employment.”
