Job Market Grows by 216,000 in December

(Chart courtesy of U.S. Bureau of Labor Statistics)

The job market held steady in December, with growth in payrolls of 216,000 and the unemployment rate unchanged at 3.7%, the U.S. Bureau of Labor Statistics reported Friday.

As in prior months, the bulk of the job gains were in just a few sectors, with a 52,000 increase in government employment leading the pack. At the same time, businesses are hiring fewer temp workers, down 33,000 for the month and down 346,000 from its peak – a sign that businesses do not need to expand their production capacity in this market.

“Job openings, the pace of hiring, and the quits rate are all trending down, but layoffs and initial claims for unemployment insurance are not moving higher,” MBA Senior Vice President and Chief Economist Mike Fratantoni said. “Together, these data indicate a market where employers are slower to take on new employees, but are not seeing enough weakness to dramatically cut payrolls.” 

First American Economist Ksenia Potapov said November’s Job Openings and Labor Turnover Survey from the BLS data suggested the same. “Hires fell to the lowest level since 2020,” she said. “Quits, a good indicator of worker confidence, fell below pre-pandemic levels. While the labor market remains strong, the pandemic distortions in JOLTS data are increasingly in the rear-view mirror.”

Fratantoni noted wage growth at 4.1% over the past year remains brisk, but said he expects this will slow in the year ahead, supporting further reductions in inflation.

“In summary, this report shows a job market little changed from November,” Fratantoni said. “We expect that the economy will slow down in 2024, and this will likely lead to increases in the unemployment rate. In terms of implications for the housing market, these data are likely to keep interest rates from falling further at this point, but we expect mortgage rates to drift down over the year as the economy slows.”