According to the monthly Current Employment Statistics (CES) report and Current Population Survey (CPS) from The Bureau of Labor Statistics (BLS), employment in the U.S. in December 2023 gained 216,000 additional jobs, while the unemployment rate stayed at 3.7%.
THE LAYOUT:
• Job creation was strongest in the Education & Health Services (+74,000), Government (+52,000), and Leisure & Hospitality (+40,000) sectors, while Trade, Transportation & Utilities was the weakest among the major sectors with no new jobs.
• The labor force participation rate dropped 0.3% to 62.5% in December; the largest one-month decline since January 2021. 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 nudged up to 7.1%.
THE SIGNIFICANCE:
• While the positive December report is somewhat dampened by the decline in the labor force participation rate, the calendar year performance has been much more upbeat than predicted. Employment and real wages expanded, leading to real private-sector workers earning 0.5% more in 2023 than the previous year. However, we expect a softening trend to establish itself in the coming months as past Federal Reserve interest rate hikes continue to exert their effects on the economy and household savings dwindle.
