When the final jobs report for 2023 is released at 8:30 am ET, economists are projecting that the US economy added 160,000 positions in December, marking an average of 232,000 jobs per month through November, and around 2.78 million for the year.
While that’s far below the 4.79 million jobs gained in 2022 — the second-highest annual total since 1939 — 2023 will still go down as a year full of twists, turns and historic gains for the labor market.
In January last year, the unemployment rate fell to 3.4%, a level not seen since 1969, when Neil Armstrong stepped on the moon.
In April 2023, the unemployment rate for Black workers hit a record low of 4.7%.
And then in June, the labor force participation rate for women in their prime working age (25-54 years old) hit an all-time high of 77.8%. The overall labor force participation rate in November was 62.8%, the highest it’s been since the start of the pandemic.
“It’s been a good year for Black men; it’s been a good year for Black women; it’s been a good year for women in general,” Jane Oates, a former Department of Labor official who is president of employment education nonprofit WorkingNation, told CNN in an interview.
2023 was also, arguably, the year of worker power: While the pandemic prompted many to reassess their career path and work-life balance, the ensuing tight labor market gave them the courage to search for other opportunities. Historically low unemployment and historically elevated job openings meant workers could demand better pay, improved health care or quality-of-life improvements.
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Hundreds of thousands of workers went on strike in 2023, from writers to actors to nurses to autoworkers. Even President Joe Biden appeared on the picket line, highlighting the United Auto Workers historic strike against General Motors, Ford and Stellantis.
The Writers Guild of America, with more than 11,000 members, and SAG-AFTRA, which represents 160,000 film and television actors, also went on strike in 2023, bringing filming to a screeching halt. It’s the first time since 1960 that both unions have been on strike at the same time.
A database of US work stoppages by the Cornell University School of Industrial and Labor Relations shows there were 70 strikes by 100 or more workers lasting more than a week. That’s an increase of 59% from the year before.
According to an analysis from CNN, nearly 900,000 unionized workers won immediate pay hikes of 10% or more in just the last year.
The latest initial weekly jobless claims, which were released Thursday morning, show 202,000 people filed for first-time unemployment insurance benefits for the week ending December 30, lower than estimates of 216,000. Continuing claims measured 1.855 million, down from the prior week’s 1.875 million and below the estimate of 1.881 million.
ADP reported Thursday that private payrolls increased by 164,000 in December, a huge jump from November’s downwardly revised 101,000 and better than consensus estimates of 125,000, according to FactSet. Its hiring total is often viewed as a proxy for Friday’s Bureau of Labor Statistics headline number.
“We’re returning to a labor market that’s very much aligned with pre-pandemic hiring,” said Nela Richardson, chief economist at ADP.
The Job Openings and Labor Turnover Survey, also known as the JOLTS report, revealed Wednesday that job openings fell in November to their lowest level since March 2021. There were a seasonally adjusted 8.79 million job openings in November. That’s down from October’s upwardly revised 8.85 million and roughly in line with economists’ expectations of 8.77 million openings, according to FactSet.
But US-based employers announced just 34,817 job cuts in December, according to monthly data released Thursday morning from outplacement firm Challenger, Gray & Christmas. That’s down 24% from November and the second-lowest monthly total of the year. Job cuts are also down 20% from a year earlier.
“Companies are posting fewer job openings, but they are not laying off workers and that keeps economic growth in the plus column in the new year,” wrote FwdBonds economist Christopher Rupkey in a note Thursday. “The labor market is not too hot and not too cold at the moment. We will leave it up to Fed officials to say whether the labor market is ‘rebalancing’ enough to bring inflation down further.”
The forecast of 160,000 jobs added for the final month of 2023 would be lower than November’s 199,000 net gain, a number that was skewed by autoworkers and actors coming off the picket lines, according to FactSet consensus estimates.
Economists anticipate that the jobless rate could inch higher to 3.8% from 3.7% the month before.
Any net gain of jobs during December 2023 would bring this current period of labor market expansion to 36 months, the fifth-highest on record.
“When it comes to trying to settle the argument about whether or not the economy is on the path toward recession in the coming year, there couldn’t be more important economic news on the planet other than the payroll jobs report,” Rupkey told CNN in an interview last week. “We haven’t had a recession without job losses, so we’re going to be tuning in to see whether or not the labor market has lost any momentum.”
A slow but steady softening of the labor market would underscore the Federal Reserve’s chances of delivering a soft landing — a decline in economic activity that brings down inflation but avoids raising unemployment. Lower inflation would signal to the central bank that it could embark on rate cuts after 11 punishing rate hikes over the last two years.
Fed officials’ latest economic projections released in December showed that they expect to cut rates this year for the first time since kicking off their historic inflation-busting campaign in March 2022.
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Wall Street is eager for the cuts, with some investors pricing in a first cut as soon as March. But some Fed officials have tempered that optimism, stressing that there are still risks that could sabotage inflation’s defeat, including geopolitical tensions and the US presidential election.
Fed Chair Jerome Powell has long cautioned that the labor market needs to cool from its breakneck pace and have a better alignment in the number of jobs available and the number of people hoping to take them.
But last month, Powell acknowledged that the US job market had come into “better balance.”
The Fed’s monetary policymaking committee announces its next decision on rates on January 31, just two days before the first jobs report of 2024 is set to be released.
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