The U.S. economy added only about 199,000 jobs in December, which was about half the number economists had projected. But the unemployment rate dropped by 0.3% to 3.9% – the lowest level since the pandemic began – according to the Employment Situation Report issued January 7 by the Department of Labor (DOL). That compares with a 6.7% unemployment rate at the end of 2020.
For the year, the economy added 6.4 million jobs, the most since 1939 when the DOL began keeping records – with job gains recorded every single month of the year. The low number of new jobs reported in December was surprising since an ADP Employment Report issued earlier in the week estimated more than 800,000 new private sector jobs for the month.
One contributing factor to the disappointing total was the high number of workers who have been leaving their jobs. In November, for instance, a record 4.5 million people quit their jobs, although many of them left to switch to other jobs, according to the DOL. While 4.5 million people quit, businesses hired 6.7 million new workers during the same month.
The leisure and hospitality industry added 53,000 jobs in December and 2.6 million in all of 2021. Professional and business services added 43,000 jobs in December, while manufacturing added 25,000 jobs. Average hourly earnings for all employees on private nonfarm payrolls rose by $0.19 to $31.31 in December, a 4.7% increase over the December 2020 pay rate of $29.81.
Energy and Real Estate lead all sectors
The Energy sector of the S&P 500 was up 54.64% in 2021 to lead all sectors, while Real Estate was up 46.19%. Other leading sectors included Financials, up 35.04% for the year, Information Technology, up 34.53%, and Materials, up 27.28%. All 11 sectors posted double-digit gains for the year.
The chart below shows the results of the 11 sectors for the past month, past quarter, and all of 2021: