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USA-Job creation above expectations in December – 01/06/2023 at 14:55

(Updated with details)

by Lucia Mutikani

WASHINGTON, Jan 6 (Reuters) – The U.S. economy added more jobs than expected in December, pushing the unemployment rate down to 3.5%, but the Federal Reserve’s interest rate hike could lead to a significant slowdown in that momentum in the middle of the year.

The Labor Department on Friday reported 223,000 nonfarm payrolls created last month and revised the November figure down to 256,000 from 263,000 originally reported.

Economists polled by Reuters predicted an average of 200,000 job creations in December, with their estimates ranging between 130,000 and 350,000.

The Department of Labor report also shows that the increase in average hourly wages slowed to 0.3% in December after +0.4%, bringing the year-over-year increase to 4.6%. The Reuters consensus was up 5.0% year-on-year.

The unemployment rate fell to 3.5% from 3.6% (revised) the previous month.

The labor market remains under pressure despite the sharp tightening of the Fed’s monetary policy that began last March. In light of rising prices, the central bank raised the federal funds rate target by 425 basis points, making it the fastest increase since the 1980s.

As companies in more tariff-sensitive sectors such as technology reduce their workforces, airlines and hotel companies have been scrambling for help since the COVID-19 pandemic. 19.

By supporting consumer spending, labor market resilience increases the likelihood that the Fed will raise and maintain its target rate above 5.1% for some time.

forecast median

officials in the central bank.

However, employment momentum may weaken significantly between now and the middle of the year, as high credit costs weigh on consumer spending and ultimately business investment.

(French version Laetitia Volga, edited by Blandine Hénault)




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