December saw a 0.3 percentage point drop in unemployment, bringing it down to 3.9 per cent. This is lower that all but five months of the late 90s boom and the time between May 2018 and pandemic.
The establishment survey revealed a slower than expected increase in 199,000 job openings, although the figures for the two previous months were revised upwards by 141,000. The average growth rate for the last three months was 360,000 after the upward revisions.
The overall employment level is now down by 3.6million or 2.3 percent from pre-pandemic levels. Private sector employment is now down by 2.6million, or 2.0 percent below its prepandemic peak.
It is important that you note that omicron wasn’t a factor in this report. The strain first experienced significant spread after the reference weeks.
Wage Growth remains Strong
This report shows little evidence of wage growth slowing. The average hourly wage has increased by 6.1 percent annually over the past three months (October-December) when compared to the previous three months (July–September). This is an increase of 4.7 percent from the previous year. The bottom continues to see the fastest growth. The annualized rate growth in the hourly wage of production and nonsupervisory workers was 6.9%, compared with 5.8 percent year over year. The annualized rate of growth for workers in hotels was 9.6 %, which is down from a rise of 15.8 percent over the same period.
Strong gains in manufacturing and construction continue to be enjoyed
December saw 26,000 manufacturing jobs added, and 22,000. Manufacturing employment is now 219,000 (1.7%) below its pre-pandemic peak, while construction employment stands at 88,000 (1.2%) lower.
Low-paying Sectors Still Struggle for Workers
December saw 6,100 job losses in residential and nursing care facilities, while the number of childcare jobs fell by 3,700. These sectors now have a 12.4 percent and 10.6% decline in employment compared to pre-pandemic levels.
In many sectors of leisure and hospitality, it is difficult to attract workers. Despite the addition of 10,000 jobs to hotels and 42,600 to restaurants in December, employment in both sectors remains below pre-pandemic levels. The employment rate in restaurants is still 653,000 or 5.3 per cent below pre-pandemic levels. Pre-pandemic levels saw a decline in hotel employment of 304,000 or 14.4 percent. However, the average workweek in the sector has increased by 1.9%, the equivalent to more 250,000 jobs with an unchanged working week.
Other Pandemic Affected Sectors Continued to Struggle
The biggest hit by the pandemic has been the movie industry. It lost 6,200 jobs in December. This puts employment at 22.9 percent below pre-pandemic levels. The arts and entertainment industry added 700 jobs in December, which is 10.6 percent less than its pre-pandemic level.
Falling State and Local Government Employment
State and local government jobs declined by another 10,000, although education employment rose by 3,200 in Dec. Since July, the number of jobs in the state- and local government sectors has been declining. It now stands at 94,000, which is 4.7% less than the pre-pandemic level. These governments cannot raise wages or offer bonus hiring to compete with the private sector.
For most groups, unemployment rates fall
The household survey showed a overwhelmingly positive picture, with many disadvantaged groups experiencing significant improvements. The unemployment rate of workers without a high-school degree fell by 0.6 percent to 4.6%, which is 1.2 percentage point higher than its prepandemic low. The unemployment rate for workers who do not have a high school diploma fell by 0.3 percentage points, to 5.2%. This is 0.3 percent above its prepandemic low. Hispanics saw their unemployment rate fall by 0.3 percentage point to 4.9 percent. This is 0.9 percentage point above its pre-pandemic low.
Black Teen Unemployment Rises from Summer Lows
The Black teenage unemployment rate was 9.9 percent in June, a record low. It has been rising in recent months. It was 21.0% in December, the second consecutive monthly high of over 20 percent.
U-6 Measure of Labor Market Slack
The Bureau of Labor Statistics U-6 measure of the labor market slack (which includes workers who are part-time but would like full-time employment and workers who report they want a job but are not actively seeking it) fell 0.4 percentage point to 7.3 percent. This level was not reached after the Great Recession, which occurred in February 2019.
Self-employment remains high
528,000 people are unincorporated and self-employed, which is higher than the average for 2019. This rise was possible earlier in the pandemic, when people were unable to find work. However, this is no longer the case.
Another A remarkably positive report
Although December’s job growth was less than expected, it is likely that it will rise in the future reports, given recent trends. The supply side is responsible for many of the jobs we aren’t seeing. Workers are unwilling to work in low-paying jobs or under poor conditions. However, the prime age (ages 25 to 54) employment-to-population ratio is still 1.5 percentage points below its pre-recession peak, so there is still some way to go before we have gotten back all the ground lost in the pandemic.
Wage growth continues at a very rapid pace. If there is no slowing in the future months, this will be inflationary.