United States: 2023 Ends on a High Note With Stronger-Than-Anticipated Job Growth

Two words can sum up the US job market's performance for December and 2023 as a whole: resilient and surprising. The US job report once again beat consensus expectations, which had called for a gain of 175,000 jobs. These numbers are all the more astonishing when you consider that there are no one-off factors giving them a boost—November's figures, for example, were aided by the end of the auto strike. The only negative point is that the totals for November and October were revised downwards by 71,000 jobs overall (November dropped from 199,000 to 173,000, while October went from 150,000 to 105,000).

The labour market's resilience was also reflected in by the larger number of sectors posting employment growth in December. Out of the 250 sectors surveyed, the share that had seen payrolls climb in December jumped up to 59.6%. That's better than November’s 56.6% and the 57.7% average recorded over the first 11 months of 2023. All the same, there were some pockets of weakness last month. The transportation and warehousing sector lost 22,600 jobs, with the largest drop in couriers and messengers. Temporary help services shed another 33,300 jobs. Unlike in November, retail employment added 17,400 jobs, but department stores reduced their workforce by 12,700 workers. Among the sectors with the largest number of employees, slight upticks were posted in construction, food services and public administration.

If we look back over the year, we can't deny that the US labour market was much stronger than anticipated for most of 2023. It's true that annual job creation was slower than in 2022, but that year's figures got a lift from the post-pandemic recovery. We can't help but admire the US job market—and indeed, the US economy in general—for its resilience despite all the challenges it faced in 2023. These included high interest rates, rising costs, events like the March banking crisis, labour disputes and restructuring in a number of sectors, particularly tech companies. It remains to be seen whether this resilience will continue into the year ahead. We still expect further weaknesses in the job market for 2024, a condition that seems necessary for curbing inflation and wage growth (which remained high in December, posting a monthly gain of 0.4%).

The US labour market remains healthy. Monthly hiring ended 2023 with its best performance since September. This resilience could raise a few eyebrows at the Fed, but probably won't disrupt the status quo in the short term.