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Employers add just 199,000 jobs in year-end hiring slowdown

U.S. economic growth fell well short of expectations last month, but the weak gain in new jobs was enough to drive the unemployment rate below 4%.

(CN) — The U.S. economy added a disappointing 199,000 jobs in December, ending a record-breaking year on a low note.   

The number of new jobs last month fell well below economists’ expectations of 422,000. Still, the unemployment rate dropped from 4.2% to 3.9%, the lowest in the pandemic era, according to a Labor Department report released Friday.

Nick Bunker, economic research director at Indeed Hiring Lab, said the labor market sent confusing signals at the end of 2021.

“Payroll growth once again came in under expectations while the unemployment rate shows a continued swift drop in joblessness,” he wrote. “Both sides of today’s report agree the labor market is recovering. The disagreement is just over how fast it is happening.”

He also noted the lackluster December jobs report doesn't reflect a new surge in Covid-19 infections caused by the more contagious but less severe omicron variant.

“Hopefully the current wave of the pandemic will lead to limited labor market damage,” Bunker said. “The labor market is still recovering, but a more sustainable comeback is only possible in a post-pandemic environment.”

Job growth averaged 537,000 per month in 2021 for a record total of 6.4 million new jobs. Overall, the economy is still down 3.6 million jobs compared its pre-pandemic level in February 2020, when the unemployment rate stood at a 50-year low of 3.5%.

The leisure and hospitality industry, hit hardest by the pandemic, added 53,000 jobs last month, most of them (43,000) at food and drinking establishments. The sector added 2.3 million jobs in 2021 but is still down 1.2 million since February 2020.

Professional and business services added 43,000 positions and manufacturing payrolls rose by 26,000. Gains were also seen in construction (22,000), transportation and warehousing (19,000), wholesale trade (14,000) and mining (7,000).

The public sector lost 12,000 jobs last month, including 2,000 in federal government and 10,000 in local government. Most other major industries showed little change in employment. 

While December’s growth comes as a disappointment, jobs gains for October and November were upwardly revised. October’s total was revised up from 546,000 to 648,000, and November’s was revised up from 210,000 to 249,000, a combined increase of 141,000 more new jobs than previously reported.  

Speaking from the White House on Friday morning, President Joe Biden emphasized the unemployment rate falling to 3.9% and called it a “historic day for our economic recovery.” He also touted the record 6.4 million jobs added in 2021.

“That’s the most jobs in any calendar year by any president in history,” Biden said.

He credited the American Rescue Plan, passed in the first weeks of his presidency. The economic relief package included $1,400 direct payments to many Americans in addition to billions of dollars for initiatives to combat Covid-19.

He said the bill helped 200 million Americans get vaccinated and “got people out of their homes and back to work, even in the face of wave after wave of Covid.”

The president pledged to continue working to create more opportunities for all Americans. He said a more productive economy and improved infrastructure under a newly passed $1.2 trillion law will help tackle rising prices caused by inflation.

“I’ve always said, when working people do well everybody benefits,” Biden said. “I’m determined to grow the economy from the bottom up and the middle out, because when we do we get more growth, higher wages, more jobs, and over time, lower prices.”

Labor Secretary Marty Walsh echoed that sentiment, saying his department is “focused on building an inclusive recovery that lifts up all workers and communities.”

“We are investing in equity and diversity in job training programs and career services, strengthening health and safety, wage and anti-discrimination protections for the most vulnerable workers, and making sure the president’s bipartisan infrastructure law creates good jobs for every community,” Walsh said in a statement Friday.

Categories / Economy, Employment, National

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