Labor Market Shows Early Signs of Loosening

Total nonfarm payrolls posted a 223,000 gain in December versus a 256,000 rise in November (revised down by 7,000), while October had an increase of 263,000 (revised down by 21,000). The December result beat the consensus expectation of 200,000.

Excluding the government sector, private payrolls posted a gain of 220,000 in December after adding 202,000 jobs in November. The average monthly gain over the 24 months since January 2021 was 437,000. However, the monthly increases appear to be slowing. Over the 14 months from January 2021 through February 2022, the average monthly rise was 535,000; for the five months from March 2022 through July 2022, the average was 376,000; and over the last five months, the average has dropped to 226,000 (see first chart). The trend in payroll gains is slowing.