The Current, delivered daily.
The monthly jobs report on December 2022 from the US Bureau of Labor Statistics showed continued strength in the labor market.
The economy added 223,000 jobs for December. That’s down from 263,000 in November, but caps off a year of growth in the job market, despite 40-year-high inflation and fears of a downturn. In all, payroll employment rose by 4.2 million in 2022, which is an average monthly gain of 375,000 jobs.
Unemployment edged down to 3.5%, keeping it in the historically low and narrow range of 3.5%-3.7% where it sat since March.
Average hourly earnings rose 0.3% or 4.6% for the year.
Job gains were driven by growth in leisure and hospitality, health care, construction, and social assistance. Retail trade employment remained essentially unchanged from the month prior.
It’s a sign that the tight job market of 2022 continued into the final month of the year. On Thursday, the Bureau also reported that job openings showed little change in November, staying at an elevated level of 10.5 million.
The job market is typically a primary indicator of consumer demand, as stable employment brings discretionary dollars. On the other hand, Federal Reserve officials say a cooling of the job market could be necessary to bring 40-year-high inflation all the way down to its 2% level. But there has been little evidence of that happening, even as the Fed keeps raising rates. December's report shows that jobs are still being added and unemployment ticked down, continuing the trend on view throughout 2022. While that's a welcome sign for retailers watching consumer demand, it will give the Fed more reason to keep its campaign of rising interest rates in place.
"On the one hand, the Fed appears on the verge of preventing labor market imbalances from widening further, which could be realized if employment growth slows more toward 100K, if not below," Bank of America economists wrote in a research note. "On the other hand, this just means labor market imbalances stop widening. Imbalances have yet to reverse."
Nonfarm payrolls, 2018-2022 (FRED)
Trending in Economy
Labor disputes on the West Coast could cause further disruption heading into peak season.
When the first half of 2023 is complete, imports are expected to dip 22% below last year.
That’s according to new data from the Global Port Tracker, which is compiled monthly by the National Retail Federation and Hackett Associates.
The decline has been building over the entire year, as imports dipped in the winter. With the spring, volume started to rebound. In April, the major ports handled 1.78 million Twenty-Foot Equivalent Units. That was an increase of 9.6% from March. Still it was a decline of 21.3% year over year – reflecting the record cargo hauled in over the spike in consumer demand of 2021 and the inventory glut 2022.
In 2023, consumer spending is remaining resilient with in a strong job market, despite the collision of inflation and interest rates. The economy remains different from pre-pandemic days, but shipping volumes are beginning to once again resemble the time before COVID-19.
“Economists and shipping lines increasingly wonder why the decline in container import demand is so much at odds with continuous growth in consumer demand,” said Hackett Associates Founder Ben Hackett, in a statement. “Import container shipments have returned the pre-pandemic levels seen in 2019 and appear likely to stay there for a while.”
Retailers and logistics professionals alike are looking to the second half of the year for a potential upswing. Peak shipping season occurs in the summer, which is in preparation for peak shopping season over the holidays.
Yet disruption could occur on the West Coast if labor issues can’t be settled. This week, ports from Los Angeles to Seattle reported closures and slowdowns as ongoing union disputes boil over, CNBC reported. NRF called on the Biden administration to intervene.
“Cargo volume is lower than last year but retailers are entering the busiest shipping season of the year bringing in holiday merchandise. The last thing retailers and other shippers need is ongoing disruption at the ports,” aid NRF Vice President for Supply Chain and Customs Policy Jonathan Gold said. “If labor and management can’t reach agreement and operate smoothly and efficiently, retailers will have no choice but to continue to take their cargo to East Coast and Gulf Coast gateways. We continue to urge the administration to step in and help the parties reach an agreement and end the disruptions so operations can return to normal. We’ve had enough unavoidable supply chain issues the past two years. This is not the time for one that can be avoided.”