December Jobs Report: US Added Just 199,000 Jobs

The slowdown in hiring in the United States continued last month as employers struggled to fill positions as many workers were left on t...

The slowdown in hiring in the United States continued last month as employers struggled to fill positions as many workers were left on the sidelines.

Employers added 199,000 jobs in December, announced Friday the Department of Labor, the smallest monthly gain of the year. The deceleration began in November, when 249,000 jobs were created.

The unemployment rate fell to 3.9% from 4.2%.

Coupled with strong wage growth – average hourly earnings rose 4.7% over the year, more than the 4.2% expected by economists in a Bloomberg survey – the rapid decline in the unemployment rate seems to suggest that a shortage of available workers may be, in part, what is holding back hiring.

“The unemployment rate is a reliable barometer, and it is falling rapidly,” said Julia Coronado, founder of research firm MacroPolicy Perspectives. “This means that the supply of labor is not sufficient to meet the demand – not a weakening demand. “

The drop in hiring came at the end of a year in which the economy created an average of 537,000 jobs per month, and more than 6.4 million jobs globally.

Data released on Friday was collected in mid-December, before the last wave of the pandemic. Since, the Omicron variant triggered a surge in new coronavirus cases, leading to an increase in hospitalizations, preventing people from working and creating new uncertainty among employers. Economists are bracing for the increase in cases to further disrupt job growth in January and the months ahead, although it is too early to say how this will affect the labor market in the longer term.

“I think Omicron will slow hiring in January,” Nela Richardson, chief economist at payroll company ADP, said before the report. “It could also strike in early February. “

The sawtooth employment situation underscores the economy’s continued susceptibility to the pandemic almost two years later. Although the labor market has improved, some industries with face-to-face interactions, including leisure and hospitality, remain extremely vulnerable to case levels.

Restaurants, hotels and other hotel businesses managed to hire at a strong pace in December – adding 53,000 workers – but other industries struggled to hire. The number of hospital employees in fact abandoned in December, the report showed, even as those companies scrambled to add nurses and doctors.

The figures may also have been affected by seasonal trends: employment data is adjusted for typical monthly models who have been devastated by the pandemic.

The slowdown could get worse before it gets better, as Omicron cases increase. Many companies have postponed return-to-office plans, some indefinitely. Restaurants and theaters are darker and darker due to staff shortages and renewed fears of infection. Some schools have reverted to distance learning, or are threatening to do so, leaving many working parents in limbo.

“We’re all kind of at the mercy of these variations and increases in case counts, and it’s hard to know when they might strike,” said Nick Bunker, director of economic research at the Indeed Hiring Lab. “Any sort of projections or outlook on the pace of gains over the next year still depends on the virus.”

Employment levels remain depressed compared to the pre-pandemic period, although vacancies remain remarkably high by historical standards. The economy has created 18.8 million jobs since April 2020 – when pandemic lockdowns were at their worst – but is still down 3.6 million jobs from February 2020.

Some of these workers may have retired. Others may wait to return when the health risks from the virus are less pronounced, or may struggle to find child care services amid regular school closings.

Yet there is ample evidence of a dynamic underlying the uneven economic recovery. A record number of Americans left their jobs in November as intense competition, especially in low-wage sectors, gave workers the opportunity to demand and seek higher wages and better working conditions.

“We have seen these subsequent waves,” Mr. Bunker said. “And then things came back to the underlying force.”

Economic decision-makers at the Federal Reserve recognize that many workers are still absent from the labor force, but increasingly signaled that they would not wait for workers to return to withdraw aid from the economy. With wages rising and inflation at its highest in nearly 40 years, officials are trying to ensure prices stay under control.

The figures released on Friday will likely confirm that the economy is approaching their target of full employment.

“The Fed will largely focus on lowering the unemployment rate,” said Gennadiy Goldberg, senior rate strategist at TD Securities, noting that markets have actually raised their expectations for rate hikes in 2022 after the release. Datas.

Officials have signaled they may hike interest rates several times this year in an attempt to slow spending and cool a fast-growing economy, and economists believe those measures could begin as early as this spring. For now, Fed policymakers seem to be content with defining “full employment” – their goal in the labor market – as low unemployment.

“I don’t think this is an internal conflict between hiking and full employment,” said Michael Feroli, chief US economist at JP Morgan. When it comes to claiming victory over labor market progress, he said, “most of them are already here.”

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Newsrust - US Top News: December Jobs Report: US Added Just 199,000 Jobs
December Jobs Report: US Added Just 199,000 Jobs
Newsrust - US Top News
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