Despite strong US employment growth in December, there are signs of softening

In spite of the Federal Reserve swiftly hiking interest rates in an effort to restrict economic growth and the pace of hiring, US companies added a respectable 223,000 jobs in December, showing that the economy is still strong.

The Department of Labor said on Friday that the unemployment rate decreased from 3.6 percent to 3.5 percent, matching a 53-year low, as businesses continued to create jobs throughout the economy.

In December, hiring shrank to its lowest level in two years and continued into 2022, helping to combat inflation.

In total, the December jobs report hinted at a potential softening in the labor market that would help the Fed fight against excessive inflation. The increase in hiring last month was the slowest for the most of 2022 and was the smallest in the previous two years.

Additionally, December saw the weakest rate of growth in average hourly wage rise in the previous 16 months. This delay might lessen the pressure on businesses to boost prices to make up for rising labor costs.

In comparison to November's 4.8 percent year-over-year gain and the most recent peak of 5.6 percent in March, the average hourly pay growth in December was up 4.6 percent from a year earlier.

According to Nick Bunker, head of economic analysis at the online job site Indeed's Hiring Lab, "if these trends continue, we may feel more and more sure that the strength of this labor market is sustainable." In contrast to the anticipated recession, "the picture for next year is unknown, although many signals indicate toward a gentle landing."

The report's indication of slower wage growth appeared to please traders on Wall Street, who sent stock market futures pointing to significant gains.