Total nonfarm payroll employment increased by 216,000 in December, according to the latest jobs report from the U.S. Bureau of Labor Statistics (BLS). The BLS also reported the change in total nonfarm payroll employment for October and November was 71,000 lower than previously reported.
“The job report today reiterated what we already knew: The economy is holding steady even as borrowing costs are elevated,” says Zonda chief economist Ali Wolf. “In fact, we saw hiring and wages pick up steam in December versus the anticipation of continued softness.”
The total unemployment rate in December held steady at 3.7%, and the number of unemployed persons was essentially unchanged at 6.3 million. Among the sectors with the largest job gains in December were government, health care, social assistance, and construction.
“While job gains were generally broad-based, the largest gains came from less cyclical sectors, including government (+52,000) and health care (+38,000),” says Doug Duncan, chief economist at Fannie Mae. “Still, we note that employment in residential construction, including specialty trade contractors, rose by 5,500 in December bringing the cumulative gain in 2023 to more than 40,000. The resilience of residential construction despite mortgage rates averaging 6.8% over the year highlights the continued demand for new housing and bodes well for housing starts activity in 2024.”
The number of long-term unemployed—those jobless for 27 weeks or more—was 1.2 million and accounted for 19.7% of all unemployed persons.
The labor force participation rate, at 62.5%, and the employment-population ratio, at 60.1%, both decreased 0.3 percentage points in December. In December, average hourly earnings for all employees rose by 15 cents or 0.4%. Over the past 12 months, average hourly earnings have increased 4.1%.
“The household survey painted a far less rosy picture of the labor market, however, with a decline of 683,000 jobs, nearly matching a decline of 676,000 people in the labor force,” notes Duncan. “Additionally, the payroll survey showed a decline of 33,000 jobs in temporary employment, which has historically led broader employment trends. As such, while the headline job gains number is a strong one, we see some conflicting signals that could indicate the labor market is set to soften in 2024.”
The number of people not in the labor force who currently want a job edged up to 5.7 million in December and was up by 514,000 over the year. Among those not in the labor force who wanted a job, the number of people marginally attached to the labor force was little changed at 1.6 million but was up 306,000 over the year.
“Importantly for the home building industry, the 10-year Treasury rose quickly following the release of the report, putting very short-term pressure on mortgage rates but within hours settled again,” says Wolf. “Further, this report discounts any anticipation of the Fed starting to cut rates by March.”
