December jobs breakdown: Which industries hired the most workers last month?

Job growth picked up in December thanks to strong hiring in health care and the government, but payroll creation slowed in other parts of the economy.

The U.S. economy continued to add jobs at a solid clip in December, as strong hiring in health care and the government helped to boost the overall payroll figure.

Employers added 216,000 jobs in December, the Labor Department said in its monthly payroll report released Friday, topping the 170,000 gain forecast by Refinitiv economists. The unemployment rate held steady at 3.7%.

"Don’t be fooled by the strong job report for December," said Sung Won Sohn, professor of finance and economics at Loyola Marymount University. "More than 86% of the gain for the month came from health care, government and construction and leisure and hospitality."

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The government accounted for the biggest payroll gains last month, with the sector adding 52,000 jobs in December. Employment continued to trend upward in local government (37,000) and the federal government (7,000). In total, the government hired an average of 56,000 workers per month in 2023 – more than double the average monthly gain seen the previous year.

There were also sizable gains within the leisure and hospitality sector last month, with payrolls growing by 40,000. Nearly all the hiring was done by bars and restaurants, with employment jumping by 22,100. Hotels hired about 6,300 workers.

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Hiring in the health care sector was the third-biggest contributor to the headline job gain last month. The industry onboarded 37,700 employees in December, with the biggest gains in hospitals (15,300), home health care services (7,0000) and the office of physicians (5,400). 

However, hiring proved to be lackluster beyond those sectors of the economy in December.

"Job growth narrowed sharply, becoming very concentrated in just a few sectors," said Julia Pollak, ZipRecruiter's chief economist. "By the end of the year, just three major sectors – health care, government and leisure and hospitality – were driving 92% of all job growth. Outside of those sectors, labor markets were starting to look anemic."

Social assistance hired 21,200 workers in December, while retail trade saw its payroll jump by 17,400. Other payroll increases took place in construction (17,000), information (14,000), professional and business services (13,000) and manufacturing (6,000).

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In addition, some sectors of the economy shed jobs or saw hiring fall flat last month. Employment within transportation and warehousing tumbled by 22,600 as couriers and messengers pulled back on hiring the Labor Department said in the report.

There were also job losses in mining and logging, which saw employment decrease by 1,000. Financial activities eked out a small gain of 2,000, and wholesale trade increased by just 5,500.

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