US economy cranks out jobs in December as wages increase

WASHINGTON — US employers hired more workers than expected in December while raising wages at a solid clip, casting some doubt on financial market expectations that the Federal Reserve would start cutting interest rates in March.

There were, however, some cracks in the closely watched employment report from the Labor Department on Friday. The economy added 71,000 fewer jobs in October and November than previously reported. While the unemployment rate held at 3.7% last month, that was because 676,000 people left the labor force, almost erasing all the gains in participation since February. Household employment fell sharply and the workweek was on average slightly shorter than in November.

Nonetheless, the report indicated that the economy avoided a recession last year and would likely continue to grow through 2024 as labor market resilience supports consumer spending.

Nonfarm payrolls increased by 216,000 jobs last month, the Labor Department’s Bureau of

Labor Statistics said. Economists polled by Reuters had forecast payrolls rising by 170,000 jobs. The economy added 2.7 million jobs in 2023, a sharp step-down from the 4.8 million positions created in 2022.

That reflected cooling demand in the economy following 525 basis points worth of rate hikes from the US central bank since March 2022. Roughly 100,000 jobs per month are needed to keep up with growth in the working age population.

Government hiring as state and local authorities try to bring education staffing back to prepandemic levels led the rise in employment last month, with 52,000 jobs added.

Government payrolls growth averaged 56,000 jobs per month in 2023, more than double the average monthly gain of 23,000 in 2022. Employment in the healthcare sector increased 38,000, spread across ambulatory healthcare services and hospitals. Unseasonably mild weather boosted hiring at construction sites, with payrolls in the industry rising 17,000. —