U.S. added 223,000 jobs in December, capping off strong 2022
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The red-hot job market capped off 2022 on a high note, with employers adding 223,000 jobs in December, the Labor Department reported Friday.
The payroll numbers reflect a slowdown from the pace of job creation earlier in the year, but they are slightly above economists' predictions that businesses had added about 200,000 jobs last month.
The unemployment rate fell to 3.5% as more workers found jobs, matching a 50-decade low. The Federal Reserve is seeking to tamp inflation by putting the brakes on the economy — including hiring — through its series of recent interest rate hikes. While employers added more jobs than expected in December, investors were cheered by last month's cooler wage growth.
"It's hard to imagine a jobs report in better balance," said Robert Frick, corporate economist with Navy Federal Credit Union, in an email. "Wage growth is slowing, which will take some pressure off inflation, and could slow Fed rate increases."
Job gains in the sectors of leisure and hospitality, health care, construction and durable goods manufacturing offset losses in temporary health services, non-durable goods manufacturing and information, the sector that contains technology and media companies.
"In large part, the job gains in 2021 & 2022 were about recovering from Covid. But we're now exceeding pre-pandemic job levels," noted Daniel Zhao, lead economist at Glassdoor.
Average hourly pay, which had been increasing at an annual rate of 5% in September, fell to 4.6% last month. While frustrating for workers whose pay is lagging cost-of-living increases, the number is sure to be an encouraging sign for the Fed in its quest to lower inflation.
The Fed has hiked interest rates seven times in the past year, with Chair Jerome Powell emphasizing in recent remarks that strong job growth, and the pay increases employers must offer to find and keep workers, can perpetuate inflation. That's because companies often raise prices to pass on their higher labor costs to their customers.
Friday's lower-than-expected report gave investors hope that the Fed can ease off on its interest-rate increases, and sent stock futures upward. The S&P 500 and the Dow were both set to open 1% higher.
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