The Bureau of Labor Statistics (BLS) released its monthly Current Employment Statistics (CES) report and Current Population Survey (CPS) for December 2022 on Friday, January 6th. The monthly change in employment given by the CES and the unemployment rate from the CPS are seen as the standard gauges for assessing the health of the U.S. labor market.
Employment in the U.S. rose by 223,000 jobs. The jobs results ended up between the Geographic Solutions, Inc. forecast of 273,000 and the WSJ forecast of 200,000. Job growth has been slightly softening since August 2022. Additionally, with the exceptions of the outbursts in job creation in February and July 2022 depicted in the above chart, job growth has been gradually weakening since October 2021. Geographic Solutions, Inc. derives its employment forecast from internal data on the number of job searchers and applications for unemployment benefits filed on Geographic Solutions state client sites. The forecast uses unemployment claims data from the U.S. Department of Labor (USDOL).
The unemployment rate fell to 3.5%, below the Geographic Solutions and WSJ forecasts of 3.7%. The unemployment rate forecast uses internal data on the number of job openings, job searchers, job applications, unemployment applications, and job severances on Geographic Solutions state client sites. The forecast uses unemployment claims data from the USDOL.
Job creation was strongest in Education & Health Services (78,000) and Leisure & Hospitality (67,000). Job growth was flat in all other industries except Trade, Transportation, & Utilities and Construction which gained a combined 55,000 jobs.
While all sectors continued to grow in 2022, Leisure & Hospitality and Government are the only major sectors to remain below their pre-pandemic employment level.
The labor force participation rate increased to 62.3% from the previous month. The more expansive U-6 unemployment rate counts discouraged workers who are no longer actively seeking work (and therefore no longer in the labor force) and those that have settled for part-time employment but desire a full-time job. This measure of unemployment declined to 6.5%.
The U.S. labor market expanded by 4.5 million jobs in 2022 as recovery from the Covid-19 pandemic continues. Despite this impressive achievement, it appears that the Federal Reserve’s drastic interest rate increases have managed to slow the pace of job growth throughout the year, albeit unevenly. Wage increases also seem to be tapering off. Both of those developments bode well for taming inflation and bringing price relief to consumers in 2023. The main question in the new year is will the Federal Reserve be able to accomplish this without pushing the labor market into a downturn.