Total nonfarm payroll employment rose by 199,000 in December, an increase of a similar magnitude to the 210,000 jobs added in November, according to the latest jobs report from the U.S. Bureau of Labor Statistics. The unemployment rate decreased by 0.3 percentage points to 3.9% in December.
“The headline number from the jobs report masks the underlying strength behind it,” says Ali Wolf, chief economist at Zonda. “December’s job growth was broad-based despite the rapid spread of the omicron variant, and wages are trending up. This jobs report gives fodder to the Federal Reserve keeping to the plan of raising interest rates starting in spring of this year.”
Doug Duncan, chief economist at Fannie Mae, says the jobs report “offered an uneven picture of the labor market.” While job growth was “disappointing,” Duncan says data from the household survey was “much more optimistic.” In addition to the low unemployment rate, labor force participation held constant, and household employment grew by over 600,000.
The number of unemployed persons continued to decrease after peaking at the end of the February to April 2020 recession. The number of unemployed individuals decreased by 483,000 to 6.3 million.
Among the unemployed, the number of permanent job losers declined by 202,000 to 1.7 million, but is still 408,00 higher than in February 2020. The number of persons on temporary layoff was relatively unchanged from November at 812,000 and is nearing its pre-pandemic 2020 level of 750,000. The number of long-term unemployed declined by 185,000 to 2 million in December, but is 887,000 higher than in February 2020. Long-term unemployed accounted for 31.7% of the total unemployed in December.
The labor force participation rate was unchanged at 61.9% in December, but remains 1.5 percentage points lower than in February 2020, while the employment-population ratio increased 0.2 percentage points to 59.5%. The employment-population ratio is 1.7 percentage points below its February 2020 level.
“The labor force participation rate and employment-to-population ratio are still below pre-pandemic levels, but early retirement and one parent focusing on childcare from previously dual-income households are influencing those numbers,” Wolf says.
According to the Household Survey Supplemental Data, the share of employed persons who teleworked because of the pandemic was 11.1%, relatively unchanged from November. During December, 3.1 million individuals reported that they had been unable to work because their employer closed or lost business due to the pandemic, down from 3.6 million in November. Of the 3.1 million, 15.9% received at least some pay from their employer for the hours not worked. Among those not in the labor force in December, 1.1 million persons were prevented from looking for work due to the pandemic, slightly down from 1.2 million in November.
According to the report, employment trended up in leisure and hospitality, professional and business services, manufacturing, construction, and transportation and warehousing.
“Like in last month’s report, the retail trade sector posted another employment decline in December, a disappointing number from the recent holiday shopping season,” Duncan says. “Given ongoing concerns about the path of the COVID-19 pandemic, it is likely many more shoppers than usual shied away from brick-and-mortar stores and did their holiday shopping online. Accordingly, how quickly the current wave of COVID-19 cases subsidies could prove crucial to job growth in the near future.”
Construction employment rose by 22,000 in December, following monthly gains averaging 38,000 over the prior three months. The largest gains in the sector occurred in nonresidential specialty trade contractors and in heavy and civil engineering construction. Overall construction employment is 88,000 below its February 2020 level.
“We note that residential construction (including specialty trade contractors) posted a decline of over 4,000 jobs in December compared to gains in recent months, which we expect will do little to ease supply constraints present in this sector,” Duncan says.
