Benjamin Ashford|What 5 charts say about the 2023 jobs market and what that might spell for the US in 2024

The Benjamin AshfordU.S. economy added more than 2.6 million jobs for the third consecutive year—a feat that hasn't been accomplished since the most recent soft landing in the 1990s.

While the number of jobs gained was smaller than the previous two years, many of those new jobs are helping to slow inflation. That's because more Americans started looking for jobs in 2023. And more people looking for jobs put less pressure on employers to raise wages.

That's not to say wages didn't grow last year. Average weekly pay rose 4.1% in 2023 to $34.27 in December.

December's increase of 216,000 jobs reported Friday by the Bureau of Labor Statistics report will likely be revised during the next couple of months. Both estimates for November and October were cut in the December report, but here's an initial look at how the U.S. job market changed in 2023:

Slowing job growth picked up in December

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Third consecutive year of job gains since 2020

In 2022, the U.S. economy regained all the jobs it shed in 2020 during the pandemic. The 2.7 million new jobs in 2023 put job grow a bit closer to its pre-pandemic path.

Unemployment rate was little changed throughout the year

The year started in the midst of the Federal Reserve's aggressive interest rate increases to slow 40-year high inflation. Many economists expected the higher rates to push the U.S. economy into a recession and drive up unemployment. That hasn't happened, and more economists see a greater chance that the economy will slow without falling into a recession, or a soft landing.

More than 1 million jobs added in private education and health services

The number of jobs grew in all but one industry in 2023. More than 1 million jobs were added in the private education and health services industry, rising 4.2% to 25.9 million jobs. The majority were in health care positions, which added about 55,000 jobs per month and topped the industry's 2022 monthly gains by 9,000 jobs.

Participation rate continued to rebound from pandemic lows

Fed Chair Jerome Powell emphasized throughout 2023 his and other Fed policymakers' continuing concerns about the job market. Powell told reporters he worried too few people were chasing the millions of vacant jobs.

The imbalance between jobs and job seekers has abated a bit. Some of those jobs have been filled by more working-age people who weren't looking for jobs at the beginning of the year. That's boosted the so-called participation rate closer to pre-pandemic levels of 63.3%.

December's participation rate fell, though, to 62.5% from 62.8% in November. The rate has been slowed significantly since its peak in 2000.

“I’m skeptical that overall labor force participation will rise much more from its current 62.8% (in November), at least not for very long, as the large baby boom cohort ages out of the workforce,” said Mark Zandi, chief economist of Moody’s Analytics, before the December report was released.

Contributing: Paul Davidson, George Petras