US job creation slows as rate rises bite

US JOB growth has slowed to almost half the level it stood at a year ago as the Federal Reserve scrambles to tame rampant inflation by raising interest rates.

Non-farm payrolls increased by 223,000 in December, official US data showed, down from a revised figure of 256,000 in November.

The Fed has been aggressively raising interest rates in an urgent attempt to cool wage growth and tackle soaring costs.

Since the spring, interest rates have jumped from close to zero to 4.5pc, the highest since 2007.

Inflation has eased slightly over recent months as a result, dropping from a high of 9.1pc in June to 7.1pc.

However, it remains still well above the Federal Reserve’s 2pc target.

Randall Koszner, an economics professor and former Federal Reserve governor, told Bloomberg: “It’s not that the Fed wants fewer jobs.

“What they want is lower wage growth, more because they are worried about persistent inflation.” Over the first three months of last year the US was adding an average of 539,000 jobs per month.

That made 2022 a record year for job creation even with recent reductions to this figure.

The greatest number of jobs added in December were seen in the leisure and hospitality sector, followed by healthcare and construction.

Only professional and business services jobs declined, by 6,000.

Nela Richardson, chief economist at ADP, which measures employment in the US private sector, said: “The labour market is strong but fragmented, with hiring varying sharply by industry and establishment size.

“Business segments that hired aggressively in the first half of 2022 have slowed hiring.

“And in some cases they have cut jobs in the last month of the year.”

ADP issues its own jobs report and has placed the number of jobs added by private employers in December at 235,000.