Labor market finishes 2023 on a high note, adding 216,000 jobs

The U.S. labor market capped off 2023 on a high note.

Employers added 216,000 jobs in the final month of the year, with the larger-than-expected gain exceeding November’s increase of 173,000, and topping forecasts of 160,000 by economists polled by Factset.

The unemployment rate held steady at 3.7%, and wages were up 4.1% in December from a year earlier, the Labor Department reported on Friday.

Payrolls employment rose by 2.7 million last year, making for an average monthly gain of 225,000. That’s below the 4.8 million increase in 2022, a year that included monthly gains of 399,000, the government said.

The monthly report could shift thinking that the Federal Reserve might start cutting interest rates as soon as March, with stock futures pointing to a lower start. 

“The labor market remains strong, and the economy continues to create jobs at a robust pace,” Rubeela Farooqi, chief economist at High Frequency Economics, wrote in an emailed note. “For Fed officials, these data – especially the uptick in wages – support the view that the policy rate needs to remain restrictive for some time. But we continue to think that rates are at a peak and the Fed’s next move will be a rate cut, likely by the middle of next year,” the economist added.

U.S. stock futures pointed to a lower start for Wall Street. Yields on the 10-year Treasury note topped 4% in the wake of the report.