199,000 Jobs Added in December, as Unemployment Rate Drops to 3.9%

Only 199,000 non-farm payrolls were added in December, the Labor Department said Friday. This number fell short of economists’ predictions for an increase of 422,000 jobs and marked a decrease from the 210,000 jobs added in November.

Sectors with the most job gains were leisure and hospitality, professional and business services, manufacturing, construction, and transportation and warehousing. There was little to no employment changes in major industries such as retail, information, financial activities, health care and government.

The Labor Department said that data collection has been hindered by impacts from the pandemic, which has made reporting monthly numbers a more ambiguous task.

The spread of the Omicron variant hindered hiring activity in late December, but the monthly report represent some growth earlier in the month. Jobless claims last week showed a near return to pre-pandemic levels, with 207,000 Americans filing initial claims for the week ending Jan. 1. This marked an increase of 7,000 from the previous week’s revised level but still on the lower end of claims in the last couple of years.

The unemployment rate was down 0.3 percentage points month over month to 3.9%, with 6.3 million people unemployed in December. Despite the slight improvement, unemployment levels are still above pre-pandemic levels. Average hourly wages for the month increased 19 cents to $31.31. In the last year, average hourly wages have increased by 4.7%.

As a record number of people quit their jobs, retailers have introduced increased pay, benefits and sign-on bonuses and have held hiring events to attract enough workers to meet consumer demand.  In general, a reluctance for workers to return to stressful retail jobs with low pay and unreliable hours has led to a major labor shortage across the retail industry.

The recent spike in national COVID-19 cases has also impacted working conditions for retail workers. The U.S. hit a pandemic record on Monday, with over 1 million cases, the Wall Street Journal reported. While many retailers are keeping their stores open, some, like Walmart, have closed some stores temporarily for cleaning. Others, Like Macy’s, have reduced store hours.

Despite the changes, the National Retail Federation’s (NRF) chief economist Jack Kleinhenz said that widespread shutdowns and store closures that happened in March 2020 are unlikely this time around.

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