Hickey Jobs Report Analysis December 2023
As we close out 2023, the U.S. economy once again exceeded expectations by adding an estimated 216,000 jobs in December, as the unemployment rate remained level at 3.7 percent.
According to the latest U.S. Bureau of Labor Statistics Jobs Report, the largest job gains for December 2023 were seen in Government, Health Care, Social Assistance, and Construction. Average hourly earnings for all employees on private nonfarm payrolls increased by 15 cents to $34.27, or 0.4 percent, resulting in a 4.1 percent increase in 2023.
The primary labor market indicators derived from the household survey overall sent mixed signals which will be tracked closely in the new year. In December, the unemployment rate remained at 3.7 percent. However, the total labor force did retract by 700,000 workers in the final month of 2023. These figures are especially critical to follow as December is historically dynamic with hiring shifts in the holiday periods.
We’re tracking these latest updates, along with labor force participation rates, wage shifts, and inflationary concerns – here are the five things you need to know from the latest U.S. Jobs Report:
U.S. employers once again exceeded expectations by adding 216,000 workers to the nation’s payrolls. However, the overall workforce did recede by 700,000 workers to close out the year.
Job growth was once again led primarily by the Government and Health Care sectors. Across the two sectors, the economy saw 52,000 and 38,000 new jobs, respectively.
Average hourly earnings remained higher than predicted with an increase of 0.4 percent. Ultimately, wages increased by 4.1 percent over the year, which remains slightly above the 4 percent target set by the Federal Reserve.
The nation’s unemployment rate remained at 3.7 percent from the previous month, which marks the 23rd straight month the metric has been below the 4 percent level.
In total, the U.S. added 2.7 million new jobs in 2023. While lower than the post-pandemic surge of the previous two years, the hiring growth is above trends from the years going into COVID-19.
For more information and insights on the latest U.S. Jobs Report, check the latest update from our Hickey Location Analytics and Incentives Team: Bureau of Labor Statistics Employment Situation Summary website.
Report Summary
According to the latest U.S. Jobs Report, during the month of December 2023, the American economy closed out the year with the addition of 216,000 jobs to Total Nonfarm Payroll employment, which exceeded market expectations. In total, the economy added 2.7 million new jobs in 2023, a trend below the previous two years following the pandemic recovery, yet higher than the years preceding the onset of COVID-19.
During December, the most substantial employment increases were concentrated in several key sectors. Notably, these sectors included Government, Health Care, Social Assistance, and Construction. Meanwhile, Transportation and Warehousing decreased employment, and those in temporary help services dropped significantly. The latter is a critical data point going into 2024 as temporary employment is typically reduced prior to permanent workers.
Reflecting on the previous months, the change in total nonfarm payroll employment for November was adjusted downwards by 26,000 jobs, from 199,000 to 173,000. The figures for October were also decreased by 45,000 workers from 150,000 to 105,000. Even though the labor market has remained strong, these revisions certainly present signs of cooling.
The nation’s unemployment rate remained at 3.7 percent in December, which marks the 23rd consecutive month being below the 4 percent threshold. Important to note though that the total labor force also shrank by 700,000 workers during the month, another key metric to track entering into 2024.
Over the course of the month, the labor force participation rate and employment-population rate decreased by 0.3 percent. As previously noted, 700,000 workers left the workforce in December.
Wages once again saw positive growth as average hourly earnings for all employees on private nonfarm payrolls rose by 15 cents, resulting in a 0.4 percent increase. Over 2024, wages in total rose by 4.1 percent – above expectations – which is slightly above the Federal Reserve’s target level of 4 percent. Many economists hope this will buoy consumer sentiment as inflation continues to ease.
Key Industries
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Still remaining below pre-pandemic levels, the dynamic Leisure and Hospitality sector, once again increased employment by 40,000 workers over the previous month. Right on par with the 2023 monthly average of 39,000 new jobs, the pace has slowed by more than 50 percent from the 2022 trend.
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Health Care was a leader across the economy once again in adding 38,000 new jobs, a slight decrease from the monthly average of 55,000 throughout 2023. Interestingly, this is a higher rate than the 2022 monthly average of 46,000 new hires.
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Over 2023, Government surged in hiring – more than double in 2022 – with the addition of 56,000 jobs per month, on average. In December, the growth was slightly below that figure at 52,000 jobs, with Local Government adding another 37,000 jobs to their payrolls, followed by 7,000 new workers hired by the Federal Government.
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Staying consistent with the 2023 trends, the Social Assistance sector added 21,000 workers in December. The industry was led by Individual and Family Services, which increased employment by 17,000 over December.
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After peaking in October 2022, the Transportation and Warehousing sector has decreased employment by 100,000 workers. December continued that trend with a loss of 23,000 workers across the dynamic industry, primarily led by the decrease of Couriers and Messengers, which declined by 32,000 jobs.
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The Manufacturing sector as a whole saw little change with the addition of 6,000 jobs in December. Following a year with market uncertainty and significant strike action, industry employment levels are virtually identical to the levels seen at the beginning of 2023.
For more information on the latest Jobs Report, including additional details on the data concepts and statistical methodologies utilized, visit the Bureau of Labor Statistics Employment Situation Summary website.
If you are interested in learning more about the Jobs Report, along with how we support our clients with dynamic labor analytics, we would be excited to connect you with one of our location strategy experts: