Unemployment Rate Falls to 3.9%, Job Gain of 199,000 in December

But new jobs fall far short of 422,000 estimate

The U.S. economy added 199,000 nonfarm payroll jobs in December 2021, as the unemployment rate declined to 3.9%. Upward trends in employment continued in leisure and hospitality, professional and business services, manufacturing, construction, and in transportation and warehousing.

Nonetheless, the addition of 199,000 new jobs fell far short of a forecasted figure of 422,000, as compiled by Dow Jones. However, the reported unemployment rate was better than the estimate, which was 4.1%.

Key Takeaways

  • The U.S. economy added 199,000 new jobs in December 2021.
  • However, this fell far short of the estimate, which was 422,000.
  • The unemployment rate fell to 3.9%, down from 4.2% in November.
  • The pre-pandemic unemployment rate was 3.5% in February 2020.

Unemployment Rate Drops

The unemployment rate in December 2021 of 3.9% represented a decline of 0.3 percentage points from 4.2% in November 2021. The number of unemployed persons fell by 483,000 to 6.3 million during December. For full year 2021, these figures are down by 2.8 percentage points and 4.5 million, respectively. As another point of comparison, in February 2020, prior to the outbreak of the COVID-19 pandemic, the unemployment rate was 3.5% and the number of unemployed persons was 5.7 million.

Fewer Long-Term Unemployed Persons

The number of long-term unemployed (people who have been jobless for 27 weeks or more) declined by 185,000 to 2.0 million in December 2021. This figure is down from 4.0 million in December 2020, but is 887,000 higher than the pre-pandemic measure in February 2020. The long-term unemployed represented 31.7% of the total unemployed in December.

Labor Force Participation Holds Steady

The labor force participation rate in December 2021 held steady at 61.9%, unchanged from November. This was the high for the year. The low was in January, at 61.4%. The pre-pandemic participation rate in February 2020 was 63.4%.

Number of Potential Job Seekers Unchanged

The number of persons who were not in the labor force but who would like to take a job was little changed at 5.7 million in December. This figure has dropped by 1.6 million during 2021, but it is 717,000 higher than in February 2020. These people were not classified as unemployed since they either were not actively looking for work during the 4 weeks preceding the survey or were
unavailable to take a job.

Average Earnings Rising

From November to December 2021, the average hourly earnings for all employees on private nonfarm payrolls rose by 19 cents (or 0.6%) to $31.31. During 2021 as a whole, average hourly earnings have increased by 4.7%. The estimates compiled by Dow Jones had anticipated rises of 0.4% for the month and 4.2% for the year.

Biggest Job Gains By Industry

The biggest job gains for December 2021 were concentrated in these industries: leisure and hospitality (+53,000 jobs), professional and business services (+43,000 jobs), manufacturing (+26,000 jobs), construction (+22,000 jobs), transportation and warehousing (+19,000 jobs), wholesale trade (+14,000 jobs), and mining (+7,000 jobs). These industries combined to add 184,000 jobs, or 92.5% of the December total of 199,000.

Article Sources
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  1. U.S. Bureau of Labor Statistics. "Employment Situation Summary." Accessed Jan. 7, 2022.

  2. CNBC. "Hiring falters in December as payrolls rise only 199,000, though the unemployment fell to 3.9%." Accessed Jan. 7, 2022.

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