January 7, 2023

The U.S. economy added +223,000 jobs in December, beating expectations of +200,000.

Over the past three months, the economy has added an average of +247,000 jobs per month.

For 2022 as a whole, the economy added +4.5 million jobs (an average of +375,000 per month), compared to +6.7 million jobs added in 2021 and a net -9.3 million jobs lost in 2020.

The jobs number for October was revised down by -21,000 and November was revised downwards by +7,000, for a net revision of -28,000.

Leisure and hospitality added the most jobs (+67k), though employment in that sector remains -932,000 (-5.5%) below its pre-Covid level. Health care jobs rose by +55k, and construction added +28k. Manufacturing changed little (+8k), as gains in durable goods (+24K) were partially offset by losses in nondurable goods (-16k). Other sectors saw relatively little change.

The U.S. unemployment rate for December edged back down to 3.5%, from a revised 3.6% in November.

The labor participation rate rose slightly to 62.3%, but remains noticeably below pre-Covid levels. The exit of so many people from the workforce has the effect of lowering the measured unemployment rate.

Many of the people who dropped out the workforce during Covid were older. The employment-to-population ratio among prime working-age people has been steadily rising back to pre-Covid highs, at 80.1%.

Average hourly wages rose by +0.3% m/m in December, up +4.6% from a year ago. However, with inflation running at +7.1% y/y (as of November), this represents a decline in average real wages.

In 3Q2022 (the latest available calculation), real hourly wages were down -4.0% from a year before.