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The U.S. economy added 223,000 jobs in December, slightly higher than market expectations of 203,000, but a decline from November’s revised increase of 256,000. In somewhat of a surprise, jobs in the goods producing sector were up 40,000 in December with an increase of 28,000 in construction, 8,000 in manufacturing, and 4,000 in mining and logging. The unemployment rate dipped to 3.5%, returning to its pre-pandemic level, and lower than the Bloomberg survey of 3.7%. The labor participation rate increased only slightly to 62.3% from 62.1% in November indicating the supply of labor will likely remain a challenge for employers in 2023.

As expected at the December 14th meeting, the Federal Open Market Committee (FOMC) raised the fed funds target rate by 50 basis points to a range of 4.25 – 4.50%, in a downshift from four consecutive 75 basis point hikes. The decision was unanimous, and there was no change to the November statement. The sentiment was hawkish, indicating that “ongoing increases” in the fed funds rate are likely appropriate and citing continued labor market imbalances.

As expected at the December 14th meeting, the Federal Open Market Committee (FOMC) raised the fed funds target rate by 50 basis points to a range of 4.25 – 4.50%, in a downshift from four consecutive 75 basis point hikes. The decision was unanimous, and there was no change to the November statement. The sentiment was hawkish, indicating that “ongoing increases” in the fed funds rate are likely appropriate and citing continued labor market imbalances.