The U.S. economy added 216,000 jobs in December, exceeding most projections, and maintaining an unemployment rate of 3.7%. This figure marks the 23rd consecutive month of under 4.0% unemployment, an unprecedented stretch in over half a century. Job gains were widespread across sectors in December, contradicting the trend observed in November where job gains were concentrated in health care, government, and culinary sectors.

Despite strong job growth, the index of aggregate hours experienced a 0.2% decrease in December. On a quarterly level, the index grew at a 0.8% annual rate. GDP is projected to demonstrate growth of about 2.5%, implying that the quarter will witness solid productivity growth.

The average hourly wage in December increased by 15 cents. This makes the annual rate over the last three months 4.3%. This growth rate might be inconsistent with the Fed’s inflation target, though the data are erratic. Such wage growth, if confirmed to be part of a more extensive trend, could signal a long-awaited shift toward decreasing wage inequality.

Employment in state and local government has finally surpassed the February 2020 employment levels. Also, traditionally cyclical sectors of the economy like manufacturing and construction added jobs, hinting that a recession might not be imminent. The retail sector added 17,400 jobs, combating the idea that job loss reported for November was a seasonal adjustment issue. Furthermore, the healthcare, motion picture industry, and restaurant sectors all reported substantial job additions.

However, the report also brought to light a surprising drop of 683,000 in the number of people reported as employed. This disparity could be due to measurement errors, as it contradicts not only the establishment survey, but also data on unemployment insurance filings and private sector reports on job growth.

The employment report reveals the robustness of the job market, with potential indicators of faster productivity growth, greater wage growth, and reduced wage inequality. Despite inconsistencies in the employment report, the overall outlook remains optimistic.