Today’s jobs report showed the economy added 223,000 jobs in December, bringing the average monthly increase over the past three months to 247,000. The number of new hires in December exceeded market expectations. Employment growth for October and November was revised downward by a combined 28,000 jobs.
The unemployment rate fell to 3.5%, matching the lowest level during the pandemic. The labor force participation rate rose to 62.3 percent. Nominal wage growth fell to 0.3% in December. Nominal wages rose by 4.6% last year.
1. Average monthly employment growth over the past three months was 247,000, a sharp slowdown from the average of 637,000 at the end of 2021.
Employment growth in October, November, and December was an average of 247,000 jobs per month (Figure 1), compared to the previous three months of July, August, and September (an average of 366,000 jobs per month) and 2021. This slowed down from the last three months of the year (637,000 monthly averages). ). As explained in his previous CEA blog, the Council of Economic Advisers should focus on three-month averages rather than single-month data, as monthly numbers are volatile and subject to revision. I prefer
One industry that has seen a notable decline in employment recently is temporary staffing, with nearly 111,000 jobs (3.5% of total employment) lost since July. A decline in temporary support services could be a leading indicator of a cooling labor market.
2. Nominal wage growth slowed to 0.3% in December.
Nominal average hourly wage growth slowed to 0.3 percent in November, following a 0.4 percent increase in November (Figure 2). Notably, both the nominal wage level and the monthly wage growth rate were revised downward for October and November. For example, November’s growth rate was revised downward from 0.6%. The average three-month wage growth rate at the end of 2022 was 4.1% per year, significantly lower than the average 6.1% at the end of 2021. Year-on-year, nominal wage growth fell to 4.6%, the lowest annual rate since August 2021. The December inflation report, which includes real wage growth, is not yet available.
3. Labor force participation rates have both increased for workers aged 16 and older and for workers in their prime years (25-54).
The labor force participation rate of workers aged 16 and over reached 62.3%. Participation has also increased among workers in their prime years, which many economists prefer because they are less susceptible to the effects of population aging. Both metrics have rebounded significantly from their pandemic lows. Overall, labor force participation growth has been relatively strong during this recovery compared to previous recoveries. At the same time, the overall labor force participation rate and the labor force participation rate of the prime-age population will remain roughly stable in 2022.
4. The unemployment rate fell to 3.5 percent, matching the lowest level during the pandemic. The broadest measure of underemployment is at an all-time low.
The unemployment rate fell to 3.5%, matching the lowest level during the pandemic. The broadest measure of underemployment includes workers who are not in the labor force but would take a job if offered, and workers who are working part-time but would like to work full-time. The underemployment rate fell to 6.5%, the lowest since the series. Both measures have kept interest rates roughly around this low level since March 2022.
As the administration has emphasized each month, monthly employment and unemployment statistics can fluctuate and payroll employment projections may be subject to significant revisions. Therefore, it is important not to read too much into a single monthly report, and it is useful to consider each report in the context of other available data.
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