December Jobs Report: A Helpful Overview

December Jobs Report: A Quick Summary
Find the full December Jobs Report here.
In our November Jobs Report overview, we discussed how we’re on a steady course, with the unemployment rate and labor force participation rate remaining level. Now, here we are, in a new year, after another somewhat steady month.

From October to November 2022, nonfarm payroll employment grew by approximately 263,000 jobs. The November unemployment rate was 3.7%, and the labor force participation rate was 62.1%. In December, the numbers were slightly up and down. From November to December 2022, nonfarm payroll grew by just 223,000 jobs. The December unemployment rate fell to 3.5%, and the labor force participation rate was 62.3%.

Modest month-to-month change has been a theme this year, and for most of us, it’s a relief. Many of us remember the recession from 15 years ago and almost all of us remember the onset of the COVID-19 pandemic from three years ago, both of which quickly sent the unemployment rate skyrocketing, albeit it for different reasons. Last year’s numbers have brought a sense of relief to the recruiting and staffing space. While plenty of challenges remain—which we’ll talk about later in this article—there have been a few less mountains to climb.

Leading and Lagging Industries
Here’s a quick breakdown of leading and lagging industries based on year-over-year changes in unemployment rates, for December 2021 and December 2022.

Leading Industries:
Agriculture and related private wage and salary workers – 9.8% unemployment rate to 5.0%
Mining, quarrying, and oil and gas extraction – 5.8% to 1.9%

Information – 4.9% to 2.4%
Leisure and hospitality – 6.7% to 5.4%

Lagging Industries:
Transportation and utilities – 3.3% to 4.0%
Self-employed workers, unincorporated, and unpaid family workers – 3.4% to 3.9%
Financial activities – 2.4% to 2.6%
Government workers – 1.5% to 1.7%

State or Region Highlights
Find the most recent state data here.
Here’s a quick breakdown of states with the highest and lowest employment differences, year-over-year, for December 2021 and December 2022.

States with Highest Employment Changes (rounded numbers)
Texas – Up 5.1%, from 13 million to 13.7
Florida – Up 4.7%, from 9.1 million to 9.6
Hawaii – Up 4.3%, from 595,000 to 621,000
North Carolina – Up 4.3%, from 4.6 million to 4.8
Oregon – Up 4.3%, from 1.9 million to 2.0

States with Lowest Employment Changes (rounded numbers)
Maryland – Up 1.9%, from 2.7 million to 2.73
Alaska – Up 2.2%, from 316,000 to 323,000
Connecticut – Up 2.2%, from 1.6 million to 1.67
Ohio – Up 2.2%, from 5.4 million to 5.5
Wisconsin – Up 2.2%, from 2.9 million to 2.96

There are some caveats with state employment numbers. For example, even though Maryland has the lowest year-over-year employment growth, that does not necessarily mean the state’s economy is lagging. Perhaps the state’s employment rate never dipped that low to begin with, leaving it less room to improve. Nevertheless, significant increases in employment like seen in Texas, Florida, and others is certainly a positive economic signal for the respective states.

In Other Economic and Workforce Management News
Challenges related to the labor force do remain. The jobs quit rate (the number of quits over a month’s period as a percentage of total employment) continues to be high, hovering close to 3.0%, the highest it has been in decades. This is fueled by people reevaluating their priorities in a post-pandemic life, moving to better-fitting or higher-paying jobs, and deciding to start their own businesses, among other reasons. This has put a slight strain on companies’ workforce management efforts, leaving them scrambling to replace talent.

Even with the largely steady job figures and high quit rate, layoffs continue to happen at a concerning pace. According to an article on INSIDER, “The reason, broadly, is twofold: business growth is slowing while labor costs are increasing. The combination is causing American companies across a variety of industries to slash headcount.”

Russell Williams, LHH’s SVP, North America Career Transitions & Mobility, mentioned a third reason for layoffs: “Interest rate increases have negatively impacted the labor market, especially in industries such as tech and even real estate. The high cost to borrow money has put pressure on home sales, forcing cuts at mortgage brokers. Although many companies continue to add jobs, we’re seeing a growing list of companies laying off increasingly high volumes of workers.”

Layoffs are a common and complex dynamic, with so many factors to consider: employee morale, media relations, severance packages, outplacement services, and more. They can also influence the ever-evolving unemployment rate and number of job candidates, particularly in local markets and in certain industries.

“We are seeing an increase in demand for our outplacement services, particularly for our career transition services, as layoffs accelerate due to macroeconomic conditions heightened by over-hiring in certain industries over the past 18 months,” said John Morgan, President of LHH Career Transition Mobility and Leadership Development.

Main Takeaway
Throughout 2022, there were no alarming dips or spikes in job growth or the unemployment rate; The latter has slowly slipped from 4.0% to 3.5%. But as inflation balloons, interest rates rise, and layoffs continue, many economists are predicting a mild recession in 2023. Will the unemployment rate reverse course? Will wage growth slow? Will the job quit rate decline? There are no answers yet, but 2023’s story has already begun and we’re watching closely.