The Forecast
Economists surveyed by the Wall Street Journal predict that the U.S. will add a robust 170,000 jobs in December. This follows an initial gain of 199,000 jobs in the previous month. However, there is considerable uncertainty surrounding these estimates, with projections ranging from 80,000 to 200,000.
One factor contributing to this uncertainty is the disruption of holiday hiring patterns caused by the pandemic. The significant shift towards online shopping may have led retailers and package shippers to hire fewer temporary workers than usual before Christmas. As a result, the typical process of adjusting the employment numbers for seasonal variations could be distorted, potentially exaggerating the true state of hiring in December.
Nevertheless, one thing is clear: the pace of hiring has slowed. While the economy added an average of 312,000 jobs per month in the first quarter of 2023, this number dropped to an average of 175,000 in October and November.
Unemployment Rate
The percentage of jobless Americans actively seeking work is expected to inch up from 3.7% to 3.8%. Despite this slight increase, it is worth noting that this remains one of the lowest unemployment rates in decades.
However, there is a potential spoiler on the horizon. The government intends to revise its unemployment data for the past five years. These revisions are typically minuscule, but if they turn out to be unusually significant this time around, economists may have to reevaluate their previous assumptions about the labor market.
Wages and Hours
In December, average hourly wages are projected to rise by 0.3%.
Stay tuned for the December jobs report to gain valuable insights into the state of the U.S. labor market.
The Outlook for Wage Growth and Hours Worked
Importance of Hours Worked
Uncertainties in Employment Figures
It is worth noting that since the onset of the pandemic, fewer businesses have been responding to the government’s employment survey. This has resulted in significant revisions to employment figures, usually downward, months after the initial data has been released. Richard Moody, chief economist of Regions Financial, highlights that low response rates to the survey have been a recurrent issue and continue to impact the reliability of initial job growth estimates.
The Fed’s Stance
The Federal Reserve’s top officials desire a further slowdown in job creation and wage growth to aid their ongoing battle against inflation. Unless there is a dramatic change in these trends, it is unlikely that the Fed will raise interest rates again this year.