Takeaways from the December jobs report
Number of added jobs decreases, but the news is not all that bleak
“The evidence is overwhelming that the labor market is exceedingly tight. The unemployment rate sliding below 4% far ahead of schedule is the highest-profile signal of that.” Stephen Stanley, chief economist at Amherst Pierpont Securities
WASHINGTON – One of the fastest years of job creation in U.S. history stumbled at the finish line in December. h Hobbled by shortages of workers and persistent threats from the coronavirus, America’s employers added just 199,000 jobs last month – the lowest monthly haul since December 2020 and only about half the total that economists had envisioned. h And December’s disappointing job gain was calculated before a surge in COVID-19 cases linked to the omicron variant, suggesting that things could at least temporarily get worse beginning this month.
The news was hardly all bleak. The unemployment rate dropped to a pandemic low of 3.9%. Wages rose. More people said they were employed in December compared with November. And the government revised its estimate of job growth in October and November upward by a combined 141,000.
Here are some takeaways from the December jobs report:
Help wanted
A big reason why hiring has slowed is simply that businesses still can’t find as many workers as they need. In November, employers posted 10.6 million job openings, the sixth straight month above 10 million – a level never reached until this year in data going back to 2000. For every unemployed American, there are now 1.4 jobs.
With their services in high demand, many workers are capitalizing on a tight labor market to seek or take better offers: A record 4.5 million quit their jobs in November.
“By virtually any measure, this is a jobs market that favors workers and is challenging employers,” said Jim Baird, chief investment officer at Plante Moran Financial Advisors. “The slowdown in job creation doesn’t reflect soft demand but the growing difficulty in filling those openings. Tight labor market conditions are likely to persist well into 2022.”
Good news on unemployment
Falling unemployment isn’t always good news. Sometimes the jobless rate can drop for the wrong reason – because people who are out of work become so discouraged that they stop looking for jobs. Once people stop looking for work, the government no longer classifies them as unemployed.
But last month’s drop in the unemployment rate – to 3.9%, a pandemic low, from 4.2% in November – was encouraging. The labor force, made up of people who either have a job or are looking for one, rose by 168,000 in December. The number who said they had jobs shot up by 651,000. And the ranks of the unemployed fell by 483,000.
“The evidence is overwhelming that the labor market is exceedingly tight,” said Stephen Stanley, chief economist at Amherst Pierpont Securities. “The unemployment rate sliding below 4% far ahead of schedule is the highest-profile signal of that.”