Private-sector employment in the U.S. witnessed an increase of 122,000 jobs in December, signaling a slowdown in hiring as the year came to a close. The latest employment data also revealed annual pay growth of 4.6%, the lowest since July 2021.
The December jobs report demonstrated a mixed performance across various industries. The goods-producing sector contributed 10,000 jobs, primarily driven by a gain of 27,000 in construction, while manufacturing faced a third consecutive month of decline, eliminating 11,000 positions. Additionally, the natural resources and mining sector experienced a loss of 6,000 jobs.
In contrast, the service-providing sector added 112,000 jobs, with the education and health services industry leading the charge by adding 57,000 positions. Other significant gains came from leisure and hospitality (+22,000), financial activities (+12,000), and other services (+13,000). Trade, transportation, and utilities saw a modest increase of 8,000 jobs, whereas professional and business services experienced a decline of 5,000 positions.
The Western U.S. was the primary driver of December’s employment growth, contributing 82,000 jobs, spurred by increases in the Pacific region (+56,000) and Mountain region (+26,000). The South and Northeast each added 19,000 jobs, while the Midwest augmented its workforce by a modest 7,000.
Job creation was notably strongest among large establishments, which added 97,000 jobs. Medium-sized establishments accounted for 9,000 jobs, while small establishments contributed 5,000 positions, with the smallest businesses (1-19 employees) showing a slight decline.
Annual pay growth for those remaining in their positions slowed to 4.6%, indicating a deceleration in wage increases amidst a cooling labor market. The pay growth for those changing jobs also saw a slight dip, reaching 7.1%.
Across industries, pay gains were highest in construction (+5.1%) and financial activities (+4.9%), while the natural resources and mining sector continued to lag with the lowest growth at (+3.8%). Among firm sizes, medium-sized businesses (50-499 employees) recorded the strongest pay growth for job-stayers at 4.8%.
The labor market shifted to a more moderate pace of growth in December, characterized by a slowdown in both hiring and pay increases. Health care notably stood out in the latter half of the year, generating more jobs than any other sector.
