The Labor Department’s December payroll report reflected the winter weather that is finally settling in across the U.S. as the gradual cooling of job growth continued. Total non-farm payroll employment increased by 216,000 in December versus job growth of 199,000 in the previous month. At 3.7 percent, the unemployment rate remained unchanged versus November. Almost 25% of the job growth this month was driven by increases in governmental headcount gains. When viewed on a full-year 2023 basis, payroll employment rose by 2.7 million with an average monthly gain of 225,000, well below the increase of 4.8 million in 2022 and an average monthly gain of 399,000.
“In 2024, many economic forecasters expect unemployment to edge higher and hiring to slow as the Federal Reserve attempts to create a glide path to a soft landing. Today’s BLS data seems to agree with that consensus. In spite of these signs of gradual cooling, we don’t see that same trend across the breadth of our talent management network. Overall, it’s a thriving competitive market in the search for top performing talent in virtually every industry where we place executive, professional, technical and managerial candidates through our global Network of over 200 executive recruitment offices,” noted Nancy Halverson, vice president of MRINetwork.
“While looking back to December’s BLS report and in fact at the totality of the 2023 employment marketplace it’s important to remember these are only individual snapshots of the dynamics of a constantly moving economy. At the start of a new year, it might be worth reminding ourselves that certain fundamentals need to be at the core of everything we do, regardless of changes in the economic landscape. Over the holiday week, I had a chance to listen to the year-end podcast from a monthly series our team presents to the recruiting community. In it, two MRINetwork executive recruitment pros with over 70 years of combined experience summarized the core values that need to characterize our relationships with clients and top talent as we help companies and candidates grow. Simply put, these two industry leaders strive to build highly competent teams with shared core values of honesty, integrity and professionalism, striving every day to treat people the way we want to be treated. Not a bad thought to keep in mind as we all launch forward with 2024 business and personal plans!” Talent Hunters | Podcast on Spotify, Apple and YouTube
Providing a succinct summary of these year-end results Matthew Luzzetti, chief U.S. economist at Deutsche Bank commented, “It’s a labor market that showed substantial resilience while cooling to levels that were much more acceptable from the Fed’s perspective. It was about as good of an outcome for the labor market as you could have hoped for in 2023.”
Lindsay Rosner, head of fixed income multi-sector investing at Goldman Sachs Asset Management, reminds that this is a key data point for future decision of Federal Reserve interest rate decisions. “With a mild winter (so far) and jobs numbers typically bolstered by seasonal hiring, we anticipated a strong and better-than-consensus number, and here it is. This number does question the confidence of the market around the March cut. We’ve got three inflation prints between now and the March meeting. Every number counts.”
Employment in leisure and hospitality increased in December (+40,000). The industry added an average of 39,000 jobs per month in 2023, less than half the average gain of 88,000 jobs per month in 2022.
In December, healthcare added 38,000 jobs. Employment continued to trend up in ambulatory healthcare services (+19,000) and hospitals (+15,000). Job growth in healthcare averaged 55,000 per month in 2023.
Employment in construction continued to trend up (+17,000). Employment in nonresidential building construction increased by 8,000. Construction added an average of 16,000 jobs per month in 2023, little different than the 2022 average monthly gain of 22,000.
Retail trade employment also gained 17,000 jobs in December. Over the month, employment increases were driven by gains in warehouse clubs, supercenters, and other general merchandise retailers (+14,000).
In December, employment in professional and business services was slightly up (+13,000). Employment in professional, scientific, and technical services continued to trend up (+25,000); this industry added an average of 22,000 jobs per month in 2023, about half the average monthly gain of 41,000 in 2022. In December, employment in temporary help services continued its downward trend (-33,000).
Employment in transportation and warehousing declined by 23,000 in December. Since reaching a peak in October 2022, employment in transportation and warehousing has decreased by 100,000.
Employment showed little change over the month in other major industries, including mining, quarrying, and oil and gas extraction; manufacturing; wholesale trade; information; financial activities; and other services.
“In this a national election year in the U.S. political pundits and candidates will focus a lot of attention on these monthly BLS reports to spin a story favorable to their campaign efforts. Our executive recruiters, our collaborative clients and top talent will analyze the data to understand short-term supply and demand issues but won’t lose sight of the need to consistently deliver value through honesty, integrity and professionalism. Let’s all have a great 2024,” noted Halverson.