A record year for U.S. job growth ended with a smaller-than-expected gain in December though economists are optimistic the labor market is in good shape going into 2022.
The Department of Labor reported Friday that the economy added 199,000 jobs in December, down from 249,000 in November. The gains were the smallest in a year that produced record growth of 6.4 million jobs as the labor market recovered from the COVID-19 pandemic.
“The year ended on a sour note, with job gains slowing even more than in November,” Daniel Zhao, senior economist at Glassdoor, said. “New and unpredictable waves of COVID-19 variants threaten to throw the recovery into reverse, showing that we’re still at the mercy of the pandemic.”
The December job gain is “a stark indication that employers are struggling to fill positions even as the United States remains millions of jobs short of pre-pandemic levels,” according to The New York Times.
However, an average of 537,000 jobs a month were added in 2021, and the unemployment rate fell faster than expected, with only 3.9% of the labor force out of work in December. Another important indicator — the labor-force participation rate — rose to 61.9% last month, the highest rate since the pandemic took hold and the third straight monthly gain.
“I think 2022 will still be a very strong year for the labor market and the economy after this Omicron disruption at the start of the year,” Julia Pollak, economist at jobs website ZipRecruiter, told The Wall Street Journal.
The labor market remains 3.6 million jobs short of pre-pandemic levels. But according to The Times, hiring has languished not because of employer demand but a lack of supply as workers retire or stay on the sidelines due to the pandemic.
Employers have responded by offering larger paychecks. In December, average hourly earnings rose 4.7% for the year to $31.31 compared with pre-pandemic wage growth of about 3%.
“The combination of rapidly declining joblessness and briskly increasing wages has prompted many economic policymakers to declare that the economy is at or near ‘full employment,’” the Times noted.