January 6, 2023 – Employment rose by 223,000 in December as the U.S. unemployment rate edged down to 3.5 percent, according to today’s U.S. Bureau of Labor Statistics report. The number of unemployed persons also decreased to 5.7 million in December. Notable job gains occurred in leisure and hospitality, healthcare, construction, and social assistance.
Among the major worker groups, the unemployment rate for Whites fell to 3.0 percent in December. The jobless rates for adult men (3.1 percent), adult women (3.2 percent), teenagers (10.4 percent), Blacks (5.7 percent), Asians (2.4 percent), and Hispanics (4.1 percent) showed little or no change over the month.
The number of long-term unemployed (those jobless for 27 weeks or more) declined by 146,000 to 1.1 million in December. This measure is down from 2.0 million a year earlier. The long-term unemployed accounted for 18.5 percent of all unemployed persons.
“Indeed, expectations for a soft landing in the economy have likely been boosted in light of today’s jobs report — yet, with the unemployment rate back to the historic low of 3.5 percent, how realistic is it to expect wage growth to move meaningfully lower?” Principal asset management chief global strategist Seema Shah said. “The Fed will likely be skeptical. And so, with the record low unemployment rate indicating that there is still so much work ahead of them, Fed policy rates are set to rise above five percent within just a few months and a hard landing looks to be the most likely outcome this year. The recession clock is ticking.”
“From the market’s perspective, the main thing they’re responding to is the softer average hourly earnings number,” said Drew Matus, chief market strategist at MetLife Investment Management. “People are turning this into a one-trick pony, and that one trick is whether this is inflationary or not inflationary. The unemployment rate doesn’t matter much if average hourly earnings continue to soften.”
Where Job Growth Occurred
• In December, employment in leisure and hospitality rose by 67,000. Employment continued to trend up in food services and drinking places (+26,000); amusements, gambling, and recreation (+25,000); and accommodation (+10,000). Leisure and hospitality added an average of 79,000 jobs per month in 2022, substantially less than the average gain of 196,000 jobs per month in 2021. Employment in the industry remains below its pre-pandemic February 2020 level by 932,000, or 5.5 percent.
• Healthcare employment increased by 55,000 in December, with gains in ambulatory healthcare services (+30,000), hospitals (+16,000), and nursing and residential care facilities (+9,000). Job growth in healthcare averaged 49,000 per month in 2022, considerably above the 2021 average monthly gain of 9,000.
• Employment in construction increased by 28,000 in December, as specialty trade contractors added 17,000 jobs. Construction employment increased by an average of 19,000 per month in 2022, little different than the average of 16,000 per month in 2021.
• Social assistance added 20,000 jobs in December. Employment in individual and family services continued to trend up over the month (+10,000). Job growth in social assistance averaged 17,000 per month in 2022, compared with the 2021 average of 13,000 per month.
• Employment in the other services industry continued to trend up in December (+14,000). Monthly job growth in other services averaged 14,000 in 2022, lower than the average of 24,000 per month in 2021. Employment in other services is below its February 2020 level by 174,000, or 2.9 percent.
• In December, mining employment increased by 4,000, reflecting job growth in support activities for mining (+5,000). Since a recent low in February 2021, mining employment has grown by 104,000.
• Employment in retail trade changed little in December (+9,000). Job growth in retail trade averaged 16,000 per month in 2022, less than half the average growth of 35,000 per month in 2021.
Executive Hiring Predictions for 2023
With market uncertainty on the minds of senior executives as we move into the new year, ON Partners recently asked its consultants to offer predictions and insights about the executive jobs they expect to be in demand in 2023. The past few years have seen one of the most volatile business environments in memory. Political, social, economic, health, and regulatory factors combined to form the perfect storm, creating a turbulent path for boards and those in the C-suite to navigate. According to ON consultants, embracing transformation in an uncertain landscape, continued digital transformation efforts, and building strong financial organizations are among the key factors expected to drive executive hiring in the coming year.
• Over the month, employment in manufacturing changed little (+8,000), as job gains in durable goods (+24,000) were partially offset by losses in nondurable goods (-16,000). In 2022, manufacturing added an average of 32,000 jobs per month, little different than the average of 30,000 jobs per month in 2021.
• In December, employment in transportation and warehousing changed little (+5,000). Air transportation (+3,000) added jobs over the month, while employment continued to trend down in couriers and messengers (-4,000) and in warehousing and storage (-3,000). In 2022, average job growth in transportation and warehousing (+17,000) was about half the average job growth in 2021 (+36,000).
• In December, government employment was essentially unchanged (+3,000). Employment in state government education declined by 24,000, reflecting strike activity among university employees.
• Employment in professional and business services remained little changed in December (-6,000). Employment in temporary help services declined by 35,000 over the month and has fallen by 111,000 since July. Job growth in professional and business services averaged 50,000 per month in 2022, roughly half of the average of 94,000 per month in 2021.
• Over the month, employment showed little change in other major industries, including wholesale trade, information, and financial activities.
Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; and Stephen Sawicki, Managing Editor – Hunt Scanlon Media