U.S. employers added 223,000 jobs in December, beating analyst expectations. The growth came despite rising interest rates aimed at slowing the job market. The unemployment rate dropped to 3.5%. Year-over-year wage growth fell to 4.6%.
223,000: U.S. employers added 223,000 jobs in December.
3.5%: The unemployment rate fell to 3.5 percent.
4.6%: Wages grew 4.6% over the past year.
December’s jobs report shows evidence the Federal Reserve’s strategy of increasing rates to provide a “soft landing” for the U.S. economy may be working. So, what would look like bad news in almost any other year is actually good news.
The 223,000 jobs added to the economy is the smallest increase in the past years, as the Wall Street Journal reports, but it is still a healthy pace of job growth. Additionally, year-over-year wage growth slowed to 4.6%. Wage growth has remained stubbornly high over the past two years, and economists feared it could contribute to high inflation. December’s report helped allay some of those concerns.
Though December’s job report was generally taken as good news, there are still some signs of unwanted weakness. As MarketWatch reports, layoffs in the technology sector are making an impact in the report. The business and professional services sector, which covers many tech roles, posted a decrease of 6,000 jobs. Additionally, while the labor force participation rate did increase in December, it still remains below prepandemic levels. This continues to contribute to the ongoing labor shortage.
Economists say that the slowing growth in December’s report will likely cause the Federal Reserve to slow the pace of interest rate increases aimed at slowing inflation. As the New York Times reports, the S&P 500 rose 2.3% with the release of the report. Investors have been eager for fewer and smaller interest rate increases. The Federal Reserve meets next on January 31.