The U.S. job market finished a strong year in December with employers adding 216,000 jobs, according to the Labor Department report. The unemployment rate stayed at 3.7%, marking two years of sub-4% unemployment, the longest stretch since the Vietnam War era. The labor market ended 2023 on a solid footing, noted Nela Richardson, chief economist for ADP. Job growth in December was evident particularly in government and healthcare sectors.

Retailers created 17,000 jobs, indicative of a robust holiday shopping season. Throughout 2023, employers generated 2.7 million positions. Although this is a deceleration from the preceding two years of vigorous recovery from the pandemic-induced layoffs, it was nonetheless the strongest annual job growth since 2015. Notably, the job market showed resilience against the backdrop of the Federal Reserve’s move to curb inflation through interest rate hikes.

Construction companies contributed 17,000 jobs in December. The leisure and hospitality sector saw an addition of 40,000 jobs, but it still hasn’t reached pre-pandemic levels of employment. Government employment also experienced a strong rebound in 2023.

Average wages were up by 4.1% from a year ago, indicating a slower wage growth rate than earlier in the year. This slower wage-price uptick provides some respite to inflation concerns at the Federal Reserve. There’s very little risk of a wage-price spiral that will push up inflation in 2024, Richardson added. In a positive signal for workers, wages have been climbing faster than prices in recent months, enhancing the purchasing power of an average paycheck.