Today the Bureau of Labor Statistics (BLS) released the Employment Situation for December 2022. The report shows that the labor market remains strong, despite the federal reserve rapidly raising interest rates to combat inflation during the second half of 2022. The report showed that the economy gained 223,000 new jobs in December, and the unemployment rate declined slightly to 3.5 percent.
Revisions to past months’ employment numbers were minor, with a reduction of 21,000 jobs in October and 7,000 jobs in October. The average job growth over the past three months is 247,000 jobs, which means employment is continuing to grow faster than the population.
The report shows that the labor market remains healthy as most sectors experienced strong job growth. The exception is professional and business services, which lost jobs during November and December after growing rapidly during the pandemic. This reduction in jobs in professional and business services likely reflects recent news of layoffs in the tech sector, while the overall increase in employment shows that these layoffs do not necessarily predict a broader weakening in the labor market.
From the household survey, the report shows that 439,000 workers entered the labor force in December, which is larger than the population growth of 136,000. This growth in workers is important for continued growth in employment and is reflected in slight increases in the labor force participation rate and the employment-to-population ratio.
Finally, average wages increased by $0.09 in December, generating a 4.6 percent wage increase for the year. While this wage growth is rapid, wages continue to grow more slowly than inflation. This kind of wage growth is consistent with a strong labor market but seems to reflect more a response to inflation rather than an important factor driving price growth.
