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U.S. job growth solid in December; wage growth slows

By Lucia Mutikani

WASHINGTON (Reuters) – The U.S. economy added jobs at a solid pace in December, pushing the unemployment rate back to a pre-pandemic low of 3.5 % as the labor market remains tight, but Fed officials may take some comfort from slower wage growth.

Still, the US central bank’s battle with inflation is far from won. A closely watched jobs report from the Labor Department on Friday also showed household employment rising at an alarming rate 717, last month’s work.

The recent decline in household employment has fueled speculation that non-farm payrolls, a leading measure of job growth, are overstating it.

The labor market has remained strong even though the Federal Reserve started last March with its fastest pace of rate hikes since 2022. It supports the economy by maintaining consumer spending. But the economy’s resilience raises the risk that the Fed could raise its target rate above the 5.1 percent peak the central bank predicted last month and hold there for some time.

“The labor market remains resilient, but is losing steam and worker shortages remain acute,” said Sal Guatieri, senior economist at BMO Capital Markets in Toronto. “While wage growth has slowed, it is still far from keeping pace with price stability. Don’t expect the Fed to reduce its hawkish rhetoric or slow down the pace of rate hikes on February 1st. “

Non-farm employment increased 200,000 last month. November data revised down to 223,10 Added work instead of 263, As previously mentioned. Economists polled by Reuters forecast an increase in employment 200, Position, estimated range is 75,000 arrive350,.

The economy added 4.5 million jobs in 2022 with an average job gain of 425, monthly.

Last month’s job gains were led by leisure and hospitality, which added 67, jobs. Restaurants and bars, as well as amusement parks, gambling and entertainment venues Mostly.

Leisure and hospitality payroll remains unchanged 717, 000 is below pre-pandemic levels.

Health care employment increased 36, Jobs. Construction employment up 25, , despite the housing market collapsing under the weight of rising borrowing costs. Manufacturing employment Rising 8, .Transportation and Warehousing Employment Headcount, as well as retail trade, also grew.

Wage rise

Government sector job growth3,10,although256 , UC employees hurt state education wages drop 000, .

Average hourly earnings rose 0.3% after rising 0.4% the previous month. That slowed wage growth to 4.6% year-over-year from 4.8% in November. Wage growth likely accelerated in January as several states raised minimum wages and cost-of-living adjustments were made for most workers across the country.

US stocks opened higher as wage growth slowed. The dollar was little changed against a basket of currencies. U.S. Treasury prices were mixed.

Christopher Rupkey, chief economist at FWDBONDS, said: “Markets may be happy that wage inflation is slowing, but if the lowest unemployment rate in history means that there are no people to hire How long?” in New York. “Higher wages are coming.”

This week government data showed there were 000 .425 There are 1 million job vacancies at the end of November, which converts to 1.130 Jobs for every unemployed person.

Average weekly work hours dropped to 34.3 hours from 10.4 hours in November, some economists interpreted as the labor market started to go weak sign.

The unemployment rate fell to 3.5% from 3.6% in November. The decline reflected strong household employment, which more than offset gains in the labor force. The government has revised seasonally adjusted figures from the household survey for the past five years, from which the unemployment rate is derived.

However, by mid-year, job growth trends are likely to slow sharply as expensive credit weighs on consumer spending and ultimately business investment.

The Federal Reserve raised its policy rate by 350 basis points last year, from near zero to 4 basis points. 25%-4.36% range, highest since late 1980. Last month, it forecast borrowing costs to increase by at least 75 basis points by the end of

.

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