Unemployment Rate Remains Steady at 3.7%
The final month of 2023 offered a solid picture of growth with 216,000 new jobs created. Due to a recent adjustment to November that dropped the job creation total from 199,000 to 173,000 in that month, December activity appears even stronger. This capped a year which has experienced a number of dips and jumps in labor market activity.
The most noteworthy gains in December employment were reported in government, healthcare, social assistance, and construction. Both transportation and warehousing lost jobs.
There was no change in the unemployment rate in December, which held firm at 3.7%.
Gains in average monthly compensation continued in December, rising by 0.4% per hour. This contributed to a gain of 4.1% in average hourly earnings over the past 12 months.
The average work week was shortened in the past month, moving from 34.4 hours in November to 34.3 hours in December.
Temporary Job Trends
The temp sector continued to contract in December, with employment dropping by 33,000 jobs.
What Does It All Mean?
As was the case with a number of monthly jobs reports in 2023, December activity defied many expectations. Jobs creation numbers were higher than estimated, while the unemployment rate continues to register below 4%. Based on hiring over the past 12 months, 2023 saw the creation of 2.7 million new jobs overall, indicating a strong labor market, despite a slower pace of growth than a year ago.
Economists suggest that current conditions point to a soft landing for the economy as inflation eases and interest rates come down. The exact timing of when that might happen remains an open question. The uncertainty is a stress point for both employees and employers. Some workers worry about their employment future, putting career moves temporarily on hold. That is happening even as a growing number of employers have shown reluctance to move forward with layoffs or individual separations, knowing how challenging it is to fill open positions. The end result is a great deal of hedging of bets and perhaps less movement in the market.
Even though the market is easing somewhat, labor supply remains tight. If fewer workers are actively looking for new jobs, the supply of available labor becomes even tighter. Amid these conditions, employers must also navigate mounting expectations from the workforce for flexibility, balance, transparency, mental health support, social and cultural progress, and more. All of this calls for employers to continue their efforts to identify talent wherever they find it. As we move forward into a new year, trends will begin to solidify, offering better insight into what can be expected in 2024.
Sources: U.S. Bureau of Labor Statistics (BLS), CNBC, Staffing Industry Analysts, MarketWatch, The Washington Post, Reuters, FOX Business, The New York Times, The Wall Street Journal