The rise in hires and wages slowed down at the end of 2022, with the Federal Reserve predicting rising unemployment rates in 2023, according to The Wall Street Journal (subscription).
What’s happening: “U.S. employers added an average of 392,000 jobs a month in 2022 through November, according to Labor Department figures”—with the leisure and hospitality sector leading these gains.
- “While slower than in 2021, the hiring pace was more than double that of 2019, the year before the pandemic began.”
However, as 2023 approached, these rates began to taper off. Many large employers laid off workers in the second half of the year—and while these actions didn’t have a significant effect on overall 2022 layoff figures, they do portend increased job losses in 2023.
- Economists also predict that the labor-force participation rate will continue to decrease due to early retirements, spurred on in part because of the pandemic.
The road ahead: Unemployment is expected to keep increasing in 2023, with some private economists projecting it to reach 5% by the end of the year, and to keep climbing in 2024. Wage growth, meanwhile, could see a continued slowdown, potentially arriving back at pre-pandemic levels in late 2023.
Our view: “While the labor market is expected to slow down in the coming months, manufacturing employment growth through the first 11 months of 2022 was the strongest since 1994, with new data for December coming on Friday,” said NAM Chief Economist Chad Moutray.
- “Moreover, average hourly earnings for production and nonsupervisory workers in the manufacturing sector rose 0.7% in November, or 5.5% year-over-year. That suggests that some of the cooling that was seen in broader data in November has yet to fully be seen among manufacturers.”