US hiring slows to the lowest level in two years with 223,000 jobs added

The U.S. added 223,000 in December as hiring cooled to the lowest point in two years and wage growth slowed from November.

The unemployment rate dropped to 3.5 percent from 3.6 percent, back to the low point before the pandemic in signs the labor market is resilient. 

But the slower rate of hiring showed signs high interest rates are taking a grip on employment amid fears of a recession and as historic inflation begins to show signs of dropping.

Economists had predicted the U.S would add 200,000 jobs in December. 

Average hourly earnings rose 0.3 percent, around half of last month’s 0.4 percent rise. That lowered the year-on-year increase in wages to 4.6 per cent from 4.8 percent in November. 

The U.S. added 223,000 in December as hiring cooled to the lowest point in two years and waged growth slowed from November

See also  Day by day, the secret powers of a woman's cycle: The best time to diet and when to bag a bargain

The unemployment rate dropped to 3.5 percent from 3.6 percent, back to the low point before the pandemic 

Government data this week showed there were 10.458 million job openings at the end of November, which translated to 1.74 jobs for every unemployed person.

The labor market has remained strong, despite the Fed embarking last March on its fastest interest rate-hiking since the 1980s.

Interest-rate sensitive industries like housing and finance, and technology companies, including Twitter, Amazon and Meta, the parent of Facebook, have slashed jobs. 

However, airlines, hotels, restaurants and bars are desperate for workers as the leisure and hospitality industry continues to recover from the COVID-19 pandemic.

Labor market resilience is underpinning the economy by sustaining consumer spending. But it raises the risk the Fed could lift its target interest rate above the 5.1% peak the U.S. central bank projected last month and keep it there for a while.

The trend in employment growth, however, could slow significantly by mid-year as expensive credit weigh on consumer spending and ultimately business investment.

The Fed last year raised its policy rate by 425 basis points from near zero to a 4.25 percent -4.50 percent range, the highest since late 2007. 

Last month, it projected at least an additional 75 basis points of hikes in borrowing costs by the end of 2023