Employers finished the year with a burst of hiring: The economy added 223,000 jobs in December, while the unemployment rate fell back to a half-century low of 3.5%, the Labor Department reported on Friday.
Why it matters: The labor market is still chugging along with healthy demand for workers, the latest sign that the economy is holding up despite recession fears.
- December's payroll gains are slightly higher than the 200,000 that economists forecast for the month.
- Jobs growth moderated from November's gains, which were revised down to 256,000. In October, updated figures show the economy added 263,000 jobs, 21,000 fewer than initially estimated.
Details: Average hourly earnings, one measure of wage growth, rose by 0.3% in December or 4.6% over the past 12 months — a slightly slower pace than the 0.4% monthly rise in November (which was revised lower from 0.6%).
- The share of people employed or searching for work, known as the labor force participation rate, ticked up only slightly to 62.3%, compared to 62.1% in November.
The big picture: In an attempt to crush inflation, the Federal Reserve has swiftly raised interest rates and signaled further increases ahead. While job growth has moderated, the labor market has stayed resilient — a welcome development for workers.
- The Fed, however, is concerned that hot demand for too-few workers will cause employees to keep raising wages in a way they view as unsustainable, and stoke inflation.
Where it stands: The December jobs data is one of the last major labor market indicators of 2022, a solid year of job gains that brought the nation back to pre-pandemic levels of employment, and then some. (It is still short of the level where it would have been had the pandemic not happened at all.)
- The economy added more than 4.5 million jobs last year, with an average of roughly 375,000 jobs added each month.
- But overall labor force participation rate remains stubbornly below its pre-pandemic level. Some of that shortfall is due to deaths from COVID-19, but other reasons include excess retirements and slower immigration.
Editor's note: This is story has been updated with additional details and a chart.
Go deeper: The job market holds steady
