WASHINGTON–The December job numbers show 2023 will go down as a year when the employment market consistently defied expectations. But what it means for the future of the Fed and rates remains the subject of debate.
New data from the Labor Department show the U.S. economy added 216,000 jobs in December, up from November’s 173,000 new jobs and stronger than most forecasters had been predicting. Hiring was revised down in both October and November.
According to the Labor Department, for all of 2023, employers added 2.7 million jobs, a slower pace than 2022 but still a better gains than the years headline into the pandemic.
slowdown from 2022, but a better gain than in the years preceding the pandemic.
The data also show the unemployment rate in December remained at 3.7%. The jobless rate began 2023 at 3.4%, matching lows not seen since the late 1960s, and remains low despite inching higher late last year.
Wages were up a strong 4.1% in December.
The Labor Department said the job gains were mostly concentrated in a handful of sectors, including government (52,000), leisure and hospitality (40,000) and health care (37,700). Construction was also up.
Analysts said the strong numbers are not expected to change the current stance of the Federal Reserve, which is to hold rates steady and even begin cutting them in 2024. But not everyone agrees.
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Brian Turner, president and chief economist with Meridian Economics, said the government said the revised numbers for October and November of 2023 indicate the employment market is weaker than it previously appeared, but also stated the updated average hourly earnings – a key measure of inflation that was up 0.4% for the month, indicates the consumer is “finally seeing some relief from significant increases in prices over the past three years.
“…The Fed will likely be paying a lot more attention to the decline in labor participation and the uptick in wage growth,” Turner stated in his analysis of the numbers. “This report does not scream rate cuts, it points more in the direction of curtailing recent market expectations of rate cuts starting as early as March.”