The labor market continued creating jobs as 2022 ended. Here are the five things we learned from U.S. economic data released during the week ending January 6.
Employment gained again in December. Nonfarm employers added a seasonally adjusted 223,000 workers to their payrolls, following gains in October and November of 263,000 and 256,000, respectively. The Bureau of Labor Statistics has nonfarm payrolls swelling by 4.503 million for all 2022. The private sector added 220,000 workers in December, split by 180,000 in the service sector and 40,000 in the goods-producing side of the economy. Industries adding the most workers were health care/social assistance (+74,400), leisure/hospitality (+67,000), and manufacturing (+28,000). Average weekly earnings of $1,125,73 were up 3.1 percent from a year earlier.
The separate households survey lowers the unemployment rate by 1/10th of a percentage point to 3.5 percent. The unemployment rate has remained within a tight 3.5 to 3.7 range since last March. The labor force grew by 439,000, putting the labor force participation rate at 62.3 percent (up 1/10th of a percentage point from November). The 25 to 54 labor participation rate also added 1/10th of a percentage point to 82.4 percent. The typical length of unemployment was 8.9 weeks (up 1/10th of a week from November), while the count of part-time workers seeking full-time work grew by 190,000 to 3.878 million. The broadest measure of labor underutilization (the “U-6” series) lost 2/10ths of a percentage point to 6.5 percent, a data series low.
Many jobs remained unfilled in November. The Bureau of Labor Statistics reports there were a seasonally adjusted 10.458 million open jobs at the end of the month, down 60,000 from October and 4.2 percent from a year earlier. Even with the recent declines, the number of unfilled jobs remained inflated by historical standards. The private sector had 9.501 million open positions, with health care/social assistance, accommodation/food services, and professional/business services each reporting more than a million openings. Employers hired 6.055 million workers in November, down 56,000 from October and 9.7 percent from a year earlier. 5.870 million workers separated from their jobs, up 114,000 for the month but off 5.3 percent from a year earlier. Layoffs fell by 105,000 to 1.350 million (+4.2 percent versus November 2021) and quits rose by 126,000 to 4.173 million (-7.5 percent versus November 2021).
Factory orders slumped in November. The Census Bureau estimates new orders for manufactured goods declined 1.8 percent to a seasonally adjusted $543.3 billion. 2022 factory orders through November totaled $5.951 trillion, 12.2 percent ahead of the comparable 2021 months. Durable goods orders plummeted 2.1 percent, while those for nondurables dropped 1.6 percent. Inching up were orders for civilian nonaircraft capital goods (+0.1 percent). Shipments decreased 0.6 percent to $548.6 billion. Year-to-date shipments of $5.950 trillion were 12.5 percent above their 2021 comparable. Unfilled orders shrank by less than 0.1 percent to $1.143 trillion and inventories grew by less than 0.1 percent to $804.7 billion.
Purchasing managers for manufacturers and the service sector reported that activity declined in December. The PMI, the headline index from the Institute for Supply Management’s Manufacturing Report on Business, slipped 6/10thsof a point to a reading of 48.4. The PMI has been below 50.0 for two consecutive months, indicative of a contracting manufacturing sector. Indices for new orders and production declined in December, leaving both below the critical 50.0 thresholds. Measures for employment and inventories improved. Only two of 18 tracked manufacturing industries expanded during the month: primary metals and petroleum/coal products.
The Services PMI, also from ISM, lost 6.9 points in December to a reading of 49.6. The Service PMI had not been below 50.0 for 2.5 years. All the major components declined, including sharp drops in business activity/production and new orders. Eleven of 18 tracked service sector industries expanded in December, led by retail, health care/social assistance, and utilities. Real estate was the service sector reporting the most significant decline.
Trade activity and deficit fell in November. The Census Bureau and Bureau of Economic Analysis report that exports dropped 2.0 percent to a seasonally adjusted $251.9 and imports slowed 6.4 percent to $313.4 billion. The resulting trade deficit of -$61.5 billion was down 21.0 percent from October and its lowest reading since September 2020. The goods deficit plummeted by $15.3 billion to -$84.1 billion, while the services surplus grew by $1.0 billion to +$22.5 billion. The former resulted from a sharp $20.7 billion drop in imported goods (including pharmaceuticals, cell phones, crude oil, automobiles, and capital goods) and a $4.9 billion decline in exported goods (including natural gas and civilian aircraft). The U.S. had its largest goods deficits with China, the European Union, and Mexico.
Other U.S. economic data released over the past week:
- Jobless Claims (Week ending December 31, 2022, First-Time Claims, seasonally adjusted): 204,000, -19,000 vs. the previous week, -20,000 vs. the same week a year earlier). 4-week moving average: 213,750 (-3.2% vs. the same week a year earlier).
- Construction Spending (November 2022, Value of Construction Put in Place, seasonally adjusted annualized rate): $1.808 trillion (+0.2% vs. October 2022; +8.5% vs. November 2021).
- Vehicle Sales (December 2022, Light Trucks and Automobiles, seasonally adjusted annualized rate): 13.314 million (-6.3% vs. November 2022; 4.7% vs. December 2021).
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What We Learned About the U.S. Economy Last Week 