Editor's Note: This report is based on survey data from November 2022 that was published in December 2022. This is the most recent data available. (Source: Bureau of Labor Statistics)

The unemployment rate held steady at 3.7% last month across the U.S., which was also true of 35 states that saw no significant month-to-month change in their respective unemployment rates. Additionally, 12 states saw increases in unemployment rates, ranging from plus 0.1% to 0.3%.

Those unemployment rate increases, however, were offset by the rate reductions that were registered in four states last month, ranging from minus 0.1% to 0.2%.  

The total number of jobs increased in eight states over the month, representing a slight uptick from what had been a steadily declining trendline in the number of states with net positive job growth during the period, having dropped from 20 to nine to seven over the preceding months.  

Below is the breakdown of the Bureau of Labor Statistics’ (BLS) market employment summary for December 2022.

States With the Highest Unemployment Rates

In the final report of the calendar year, and perhaps for the first time in 2022, Washington, D.C. (4.6%) was not the ‘state’ with the highest unemployment rate. Instead, D.C. was overtaken by Nevada, which has been trending in the wrong direction as of late.

Not only did Nevada have the highest unemployment rate last month at 4.9%, but also Nevada saw its unemployment rate rise by the greatest margin (tied with Oregon at +0.3%), followed by Illinois at 4.7% after tying Nevada at 4.6% the month before.  

In total, six states and D.C. had unemployment rates higher than the U.S. average last month, and 12 states saw month-over-month unemployment rate increases.

Over the year, the only state that registered an unemployment rate increase was Oklahoma, which saw its unemployment rate grow by 0.6% over the past 12 months.

States With the Lowest Unemployment Rates

For the first time in the back half of 2022, Utah beat out Minnesota as the state with the lowest unemployment rate at 2.2%.

Utah actually tied Minnesota for the lowest unemployment rate last month at 2.1% and managed to retain superlative positioning last month, despite a 0.1% increase in its unemployment rate over the term.

In total, 17 states had unemployment rates that were appreciably lower than the national average of 3.7% last month.  

Throughout 2022 thus far, New Mexico has recorded the largest unemployment rate reduction at minus 1.9%, followed by California and New Jersey—each of which saw their unemployment rates fall by 1.7%.

States With New Job Gains

Florida recorded the most new jobs as of the latest report, adding just over 28k employees to payrolls within the state, which significantly outpaced the approximate 17.5k new jobs added in Illinois and Massachusetts, respectively—rounding out the top three states with the largest expansion to the demand side of their labor market dynamics last month.

With 1% growth, West Virginia saw the biggest percentage increase to its payroll figures over the month, followed by New Hampshire at plus 0.6% and Massachusetts and Oklahoma at half a point apiece.

Over the past 12 months, though California has seen the largest number of total jobs added to the payrolls of in-state businesses (675k), Texas and Florida have reported the largest percentage increases at plus 5.1% and 4.7%, respectively.

Mployer Advisor’s Take

The year is winding down, inflation is trending down, and the Federal Reserve’s final interest rate hike of the year is down (at half a point increase) relative to the previous four consecutive interest rate hikes of 0.75%.

While a 0.5% interest rate hike is still double the standard quarter-point hike, amidst war in Europe and lingering pandemic-related issues, these are not ‘standard’ times. As such, a one-third reduction in the interest rate hikes we’ve become accustomed to is certainly movement in a positive direction.

Perhaps the most encouraging aspect is simply that such a move indicates the Fed is seeing positive signs in its inflation forecasts going forward. With the labor market seemingly resilient and relatively stable, we could be on a path to severely limit or avoid any looming economic downturn.  

A softening of the labor market coinciding with the softening of inflationary pressures like this is just the kind of soft landing that the Fed has been aiming for—a goal that certainly seems more within reach now than it did earlier this year.

Looking for more exclusive content? Check out the Mployer Advisor blog, or review last month's market employment summary here.