December employment report beat expectations againwhile the main service industries continued to grow strongly.
Health and social services lead the way, with more than 74,000 jobs created last month. Bureau of Labor Statistics said in its report, released Friday. That was largely driven by a 30,000 payroll increase in the emergency healthcare sector.
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It was followed by entertainment, hospitality and construction, with increases of 67,000 and 28,000 respectively.
Julia Pollak, chief economist at ZipRecruiter, said: “Healthcare has recovered to pre-pandemic levels, but has yet to hit pre-pandemic trends and hospitality has yet to return to pre-pandemic levels. epidemic”. Pollak added that both sectors are poised for long-term growth due to shifting consumption trends and aging populations.
Retail trade and the transportation and warehousing sectors also rose slightly after losing jobs in the previous two months.
The highlight of the report for investors was lower wage growth, which could be a sign that the Federal Reserve’s efforts to reduce inflation are working. The central bank is trying to achieve a soft landing in which wages and inflation cool without a spike in unemployment, but has made it clear that inflation is their top priority.
Moderate wage growth is also one of the few indications in the report that the labor market may soften a bit ahead of what many economists predict could be a recession or contraction in the future. this year.
“This is a very fragmented labor market, even if it gains solid overall gains and we’ll see that happen in 2023. Interest rate sensitive sectors like manufacturing, I think. think, there’s a high risk. burden, but that will depend on consumers still being able to spend,” ADP chief economist, Nela Richardson, said Friday on “Ink pot.“
The information sector has cut 5,000 jobs, possibly reflecting layoffs at tech companies.
Professional and business services saw the biggest declines in the above sectors, losing 6,000 jobs. That was driven by even bigger losses in the temporary concierge services category, Pollak said, which could be a precursor to layoffs elsewhere.
“This report has great, very encouraging signals given what happened in the rearview mirror. But the leading indicators are a bit more worrying,” Pollak said.
