The job market wrapped up 2023 with a surprisingly hot December

• The economy added 216,000 jobs in December.
• That's way more than the forecast of 170,000.

The Bureau of Labor Statistics released on Friday the latest employment and unemployment data, highlighting how the workforce was doing before the new year kicked off.

There were 216,000 nonfarm payrolls added in December, above the forecasted growth of 170,000. The most recent gain was also above November's increase.

"2023 was definitely kind of the story that worst expectations never really came to pass," Aaron Terrazas, chief economist at Glassdoor, told Business Insider. "We didn't have this massive recession that a lot of people were fearing at this time last year, in large part due to the labor market."

November's gain was revised from 199,000 to 173,000. Additionally, October's growth was revised from 150,000 to 105,000.

Leisure and hospitality ended the year still below its pre-pandemic level. However, it did add some jobs, with an employment gain of 40,000.

Construction and information were two other industries that saw an employment gain from November to December. Construction saw a gain of 17,000, while the information sector saw a gain of 14,000. Government work also saw a pretty large one-month increase, with a gain of 52,000.

Transportation and warehousing saw employment drop by around 23,000.

"Couriers and messengers lost 32,000 jobs, while air transportation added 4,000 jobs," Friday's news release from BLS stated. "Since reaching a peak in October 2022, employment in transportation and warehousing has decreased by 100,000."

Nick Bunker, economic research director for North America at the Indeed Hiring Lab, said one notable trend "is just how concentrated some of these gains have been."

Bunker pointed to "healthcare and government really continuing to be an important source" of job gains as well as the leisure and hospitality industry.

The unemployment rate stayed the same from November to December at 3.7%. That rate was just below the 3.8% that was expected to be seen for December.

"For most of last year, the way the labor market was coming more into balance or sort of moderating in a relatively painless way was that demand was slowing down while supply was picking up," Bunker said. "And while it looks like demand is still moderating a bit, supply really doesn't seem to be growing at the rates we would like to see."

While the unemployment rate stayed the same, the labor force participation rate declined from 62.8% to 62.5%. The employment-population ratio also fell slightly — from 60.4% in November to 60.1% in December.

"Overall this year, that household survey has shown very, very strong labor force numbers," Julia Pollak, chief economist at ZipRecruiter, said adding the series can be noisy.

"So I don't read too much into the one-month decline," Pollak said. "The trend in labor force participation has been pretty strongly, steadily positive over the course of the year."

Average hourly earnings have generally been softening. However, the year-over-year increase in December was slightly higher than the year-over-year increase in November, at 4.1% for December and 4.0% in November. Earnings stood at $34.27 in December.

Average hourly earnings climbed 0.4% from November to December.

Additionally, the number of quits in November was around the pre-pandemic February 2020 level, per a separate report. There were 3.5 million quits, 8.8 million openings, and 1.5 million layoffs and discharges in November, based on data released Wednesday.

Pollak said while the new employment report may show the labor market is "all the way back to pre-pandemic normal," the Job Openings and Labor Turnover Survey report suggests "there may be continued slowing ahead."

"That's because job openings have slowed meaningfully," Pollak said. "Yes, they're still above the pre-pandemic level, but arguably if you take out the positive time trends in job openings, they aren't."

The recent quit data — where quits have broadly been cooling and recently stood around the pre-pandemic mark — could be indicating not as many people are job hopping. Instead, they are part of what could be considered the Big Stay.

As Terrazas explained in a recent written statement before Friday's report, that doesn't necessarily mean workers like their work.

"We should not assume that employees are more content in their jobs just because they are staying put," Terrazas said. "In some sense, this is shaping up to be a key challenge for companies in 2024: More employees who aren't necessarily thrilled to be where they are, but also aren't leaving due to the absence of alternatives."

Economists and others will be keeping an eye on whether the Fed will be cutting rates in 2024. The Federal Open Market Committee will meet at the end of January.

"We'd like to continue to build on what happened in 2023," Acting Secretary of Labor Julie Su told Business Insider. "This is a finish the job year for 2024. The president's been clear about that, and we're on the right track, but we have more work to do."