NATIONAL NEWS

Cooler hiring and milder pay gains could aid inflation fight

Jan 6, 2023, 2:03 PM | Updated: 2:18 pm

FILE: A "now hiring" sign is posted at a Home Depot store on August 05, 2022 in San Rafael, Califor...

FILE: A "now hiring" sign is posted at a Home Depot store on August 05, 2022 in San Rafael, California. According to data released by the Bureau of Labor Statistics, the U.S. economy added 528,000 jobs in July, far more than the 250,000 expected by analysts. The national unemployment rate dropped to 3.5%. (Photo by Justin Sullivan/Getty Images)

(Photo by Justin Sullivan/Getty Images)

WASHINGTON (AP) — America’s employers added a solid 223,000 jobs in December, evidence that the economy remains healthy even as the Federal Reserve is rapidly raising interest rates to try to slow economic growth and the pace of hiring.

With companies continuing to add jobs across the economy, the unemployment rate fell from 3.6% to 3.5%, matching a 53-year low, the Labor Department said Friday.

All told, the December jobs report suggested that the labor market may be cooling in a way that could aid the Fed’s fight against high inflation. Last month’s gain was the smallest in two years, and it extended a hiring slowdown that began last year. And average hourly pay growth eased to its slowest pace in 16 months. That slowdown could reduce pressure on employers to raise prices to offset their higher labor costs.

Average wage growth was up 4.6% in December from 12 months earlier, compared with a recent peak of 5.6% in March. And in the past three months, job gains have averaged 247,000 — a decent pace but well below 2022’s monthly average of 375,000.

“If these trends continue, we can feel more and more confident that the strength of this labor market is sustainable,” said Nick Bunker, head of economic research at the online job site Indeed’s Hiring Lab. “The outlook for next year is uncertain, but many signs point toward a soft landing,” rather than a feared recession.

Traders on Wall Street appeared encouraged by the jobs report’s suggestion of milder pay growth. Stock prices rose sharply.

At the same time, December’s hiring figures don’t necessarily make the Fed’s path forward any clearer. The pace of job gains is still strong enough to keep lowering the unemployment rate, which, in turn, could keep pay growth high. Lisa Cook, a member of the Fed’s Board of Governors, said in a speech Friday that “inflation is far too high” and “of great concern,” though she also noted that wage growth “has indeed started to decelerate.”

Other recent data also point to a cooling economy: A measure of business activity in services, including finance, restaurants and transportation, contracted in December for the first time since 2020. A similar measure for manufacturing also shrank last month.

And a near-doubling of mortgage rates this year has sent home sales tumbling for 10 straight months.

Last month’s job gains capped a second straight year of robust hiring during which the nation regained all 22 million jobs it lost to the COVID-19 pandemic. Yet the rapid hiring and the hefty pay raises that accompanied it likely contributed to a spike in prices that catapulted inflation to its highest level in 40 years.

The picture for 2023 is much cloudier. Many economists foresee a recession in the second half of the year, a consequence of the Fed’s succession of sharp rate hikes. The central bank’s officials have projected that those increases will cause the unemployment rate to reach 4.6% by year’s end.

Though the Fed’s higher rates have begun to cool inflation from its summertime peak, they’ve also made mortgages, auto loans and other consumer and business borrowing more expensive.

For now at least, the pace of hiring is showing surprising resilience in the face of higher interest rates across the economy. One recent beneficiary is Ethan Edwards of Oklahoma City, who accepted a job offer last month after having looked around for nearly a year.

Edwards, 41, had taken his time because he was picky: He already had a job in local broadcasting, where he worked in marketing. But he wanted to find a position in a new industry in which he could work from home while avoiding a pay cut.

The strong job market eventually delivered. A recruiting firm, Aquent, connected Edwards to a digital marketing company, where he now leads strategic planning.

“So far,” he said, “every step of the way has been awesome.”

Among industries, the largest job gains last month were in health care, which added 74,000. Leisure and hospitality, a category includes restaurants, hotels, and entertainment, gained nearly as much: 67,000.

Retailers added 9,000, transportation and warehousing companies nearly 5,000. Construction companies added 28,000 — a surprisingly large gain considering that higher borrowing rates are dragging down residential and commercial real estate.

Many of those jobs were part-time positions. That trend suggests that as inflation began to accelerate, some people took on second jobs to help keep up with rising costs.

Bill Adams, chief economist at Comerica Bank, noted that the December jobs report showed that roughly 80% of people who found jobs last month took part-time work, which typically pays less than full-time jobs. That is likely one reason why wage growth has been slowing.

President Joe Biden suggested Friday that the continuing job gains were, in part, a reflection of his policies, in which the government supplied vast aid during the pandemic to boost hiring and then added spending on infrastructure, computer chips, manufacturing and other areas to support business investment.

“It’s a good time to be a worker in America,” Biden said in a statement. “We still have work to do to bring down inflation.”

Jared Bernstein, a top economic adviser to Biden, said the administration is still hoping for growth in inflation-adjusted wages.

“What’s important to us is that families have the buying power through their paychecks to get ahead,” Bernstein said

Some companies, notably restaurants and hotels, are still scrambling to regain jobs lost to the pandemic. Among them is HMSHost, which operates 990 airport restaurants in North America under 350 different brands. The company is looking to hire 100 workers to help staff new restaurants that will open in the coming weeks.

Laura E. FitzRandolph, the chief human resources officer, said the company expects demand for travel to remain strong in 2023.
“We’re not slowing down in our hiring efforts or our business at all,” she said.

HMSHost hired roughly 23,000 people last year as the company desperately tried to staff up after laying off 90% of their workers during COVID-19 shutdowns. FitzRandolph said many job applicants had failed to show up for interviews. But in recent months, the company is seeing more people apply for openings, and those applicants are more likely to appear for interviews.

“It’s becoming somewhat easier to find people to work in the restaurant industry,” she said.

In June, year-over-year inflation had reached 9.1%, the highest level in 40 years, before slowing to 7.1% in November. Last year, in an aggressive drive to reduce inflation back toward its 2% goal, the Fed raised its benchmark rate seven times.

Fed Chair Jerome Powell has emphasized in recent remarks that consistently strong job growth, which can force employers to raise pay to find and keep workers, can perpetuate inflation: Companies often raise prices to pass on their higher labor costs to their customers. And higher pay typically fuels more consumer spending, which can keep inflation elevated.

For that reason, Powell and other Fed officials have signaled their belief that to tame inflation, unemployment will have to rise from its current low level.

Technology companies have been laying off workers for months, with some, including Amazon, saying that they had hired too many people during the pandemic. Amazon has boosted its layoffs to 18,000 from an earlier announcement of 10,000. Cloud software provider Salesforce says it will cut 10% of its workers. And Facebook’s parent company Meta says it will shed 11,000.

Yet outside of high tech, smaller companies, in particular, are still hiring. According to the payroll processor ADP, companies with more than 500 employees cut jobs in December, while businesses below that threshold added many more workers. And an analysis by investment bank Jefferies showed that small companies were posting a historically high proportion of job openings.


Associated Press Writer Josh Boak contributed to this report.

KSL 5 TV Live

National News

A call about a suspicious vehicle in a Walmart parking lot in St. George ended with a couple of arr...

Collin Leonard, KSL.com

St. George police arrest man wanted in connection with Colorado attempted murder case

A call about a suspicious vehicle in a Walmart parking lot in St. George ended with a couple of arrests, including one person wanted in connection with an attempted murder in Colorado.

14 hours ago

Republican presidential candidate Nikki Haley takes a question from an audience member during a tow...

Bridger Beal-Cvetko, KSL.com

Nikki Haley to visit Utah next week ahead of Super Tuesday presidential caucus votes

Republican presidential candidate Nikki Haley will visit Utah next Wednesday, ahead of the state's GOP presidential preference poll during caucus meetings on Super Tuesday.

17 hours ago

Beyoncé is pictured at the 2024 Grammy Awards in Los Angeles.
Mandatory Credit:	Kevin Mazur/Getty ...

Alli Rosenbloom, CNN

Beyoncé debuts at No. 1 on Billboard’s Hot Country Songs chart and makes history

Beyoncé’s new song “Texas Hold ‘Em” debuted in the top spot of Billboard’s Hot Country Songs chart on Tuesday.

18 hours ago

FILE - Portrait of British pop group The Beatles (L-R) Paul McCartney, George Harrison (1943 - 2001...

Jake Coyle, AP Film Writer

Beatles to get a Fab Four of biopics, with a movie each for Paul, John, George and Ringo

The Beatles are getting the big-screen biopic treatment in a Fab Four of movies that will give each band member their own film.

18 hours ago

WILMINGTON, DELAWARE - JULY 26: Hunter Biden, son of U.S. President Joe Biden, departs the J. Caleb...

Rio Yamat and Lindsay Whitehurst

Ex-FBI informant charged with lying about Bidens had Russian intelligence contacts, prosecutors say

Prosecutors say a former FBI informant charged with making up a multimillion-dollar bribery scheme involving President Joe Biden had contacts with officials affiliated with Russian intelligence.

18 hours ago

Capital One is acquiring Discover Financial Services, a move that could disrupt the credit card ind...

Elisabeth Buchwald, CNN

America is on the cusp of a new biggest credit card company. Here’s what it could mean for you

Capitol One is acquiring Discover Financial Services in a $35.3 billion all-stock deal.

19 hours ago

Sponsored Articles

Modern chandelier hanging from a white slanted ceiling with windows in the backgruond...

Lighting Design

Light Up Your Home With These Top Lighting Trends for 2024

Check out the latest lighting design trends for 2024 and tips on how you can incorporate them into your home.

Technician woman fixing hardware of desktop computer. Close up....

PC Laptops

Tips for Hassle-Free Computer Repairs

Experiencing a glitch in your computer can be frustrating, but with these tips you can have your computer repaired without the stress.

Close up of finger on keyboard button with number 11 logo...

PC Laptops

7 Reasons Why You Should Upgrade Your Laptop to Windows 11

Explore the benefits of upgrading to Windows 11 for a smoother, more secure, and feature-packed computing experience.

Stylish room interior with beautiful Christmas tree and decorative fireplace...

Lighting Design

Create a Festive Home with Our Easy-to-Follow Holiday Prep Guide

Get ready for festive celebrations! Discover expert tips to prepare your home for the holidays, creating a warm and welcoming atmosphere for unforgettable moments.

Battery low message on mobile device screen. Internet and technology concept...

PC Laptops

9 Tips to Get More Power Out of Your Laptop Battery

Get more power out of your laptop battery and help it last longer by implementing some of these tips from our guide.

Users display warnings about the use of artificial intelligence (AI), access to malicious software ...

Les Olson

How to Stay Safe from Cybersecurity Threats

Read our tips for reading for how to respond to rising cybersecurity threats in 2023 and beyond to keep yourself and your company safe.

Cooler hiring and milder pay gains could aid inflation fight