Unemployment Rate Falls to 3.9 Percent

January 7, 2022 – Employment rose by 199,000 in December as the U.S. unemployment rate fell to 3.9 percent, according to the most recent U.S. Bureau of Labor Statistics report. Employment continued to trend up in leisure and hospitality, in professional and business services, in manufacturing, in construction, and in transportation and warehousing.

The unemployment rate declined by 0.3 percentage point to 3.9 percent in December, and the number of unemployed persons decreased by 483,000 to 6.3 million.

Over the year, these measures are down by 2.8 percentage points and 4.5 million, respectively.  Among the major worker groups, the unemployment rates for adult men (3.6 percent), adult women (3.6 percent), and Whites (3.2 percent) declined in December. The jobless rates for teenagers (10.9 percent), Blacks (7.1 percent), Asians (3.8 percent), and Hispanics (4.9 percent) showed little or no change over the month.

In addition, ADP reported on Wednesday that private-sector employers added back 807,000 jobs in December, coming in at nearly double the consensus expectation and marking the biggest rise since May.  The numbers “suggest that worker shortages were becoming a bigger restraint on employment growth, even before the Omicron surge in infections, which could knock hundreds of thousands off payrolls in January,” wrote Michael Pearce, senior U.S. economist at Capital Economics.

“Both sides of today’s report agree the labor market is recovering,” said Nick Bunker, economic research director at Indeed. “The disagreement is just over how fast it is happening.”

The report “showed further progress towards maximum employment,” Deutsche Bank AG economists led by Matthew Luzzetti said in a note. “We now expect that liftoff will occur in March and that the Fed will undertake four total rate hikes this year.”

Where Job Growth Occurred

• Employment in leisure and hospitality continued to trend up in December (+53,000). Leisure and hospitality has added 2.6 million jobs in 2021, but employment in the industry is down by 1.2 million, or 7.2 percent, since February 2020. Employment in food services and drinking places rose by 43,000 in December but is down by 653,000 since February 2020.

• Employment in professional and business services continued its upward trend in December (+43,000). Over the month, job gains occurred in computer systems design and related services (+10,000), in architectural and engineering services (+9,000), and in scientific research and development services (+6,000). Employment in professional and business services overall is slightly below (-35,000) its level in February 2020.

• Manufacturing added 26,000 jobs in December, primarily in durable goods industries. A job gain in machinery (+8,000) reflected the return of workers from a strike. Manufacturing employment is down by 219,000 since February 2020.

• Construction employment rose by 22,000 in December, following monthly gains averaging 38,000 over the prior 3 months. In December, job gains occurred in nonresidential specialty trade contractors (+13,000) and in heavy and civil engineering construction (+10,000). Construction employment is 88,000 below its February 2020 level.

• Employment in transportation and warehousing increased by 19,000 in December. Job gains occurred in support activities for transportation (+7,000), in air transportation (+6,000), and in warehousing and storage (+5,000). Employment in couriers and messengers was essentially unchanged. Since February 2020, employment in transportation and warehousing is up by 218,000, reflecting job growth in couriers and messengers (+202,000) and in warehousing and storage (+181,000).

• Employment in wholesale trade increased by 14,000 in December but is 129,000 lower than in February 2020.

• Mining employment rose by 7,000 in December. Employment in the industry is down by 81,000 from a peak in January 2019.

• In December, employment showed little or no change in other major industries, including retail trade, information, financial activities, health care, other services, and government.

Looking Ahead 

Global employer confidence continues to return as 2022 finds the latest ManpowerGroup Employment Outlook Survey of more than 39,000 employers. Employers in 36 of 40 countries report stronger hiring intentions than the previous quarter with greatest demand for IT talent and hospitality workers. Organizations are also offering more flexibility to overcome talent shortages with employers across all sectors preparing a shift to hybrid working as a pathway to even more flexible working options in the longer term.

“The post-pandemic hiring recovery that has been underway for some time will continue to carry momentum into 2022 with employers predicting strong demand for talent across key sectors,” said Jonas Prising,  chairman and CEO of ManpowerGroup. “Companies all over the world need skilled workers to meet their business objectives and fully participate in the economic global recovery. Talent shortages continue and employers are competing with a talent pool that has not full returned to labor markets due to the pandemic. Organizations need to embrace bold thinking on where, when, and how work gets done to meet what workers want while balancing the requirements of business.”

Related: Major Paradigm Shifts Coming Out of the Coronavirus Crisis

Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; and Stephen Sawicki, Managing Editor – Hunt Scanlon Media