Total nonfarm employment recovers in 2022, with some major industry sectors lagging behind

All major industry sectors experienced employment growth in 2022. Most sectors experienced a deceleration of job growth compared with 2021, including leisure and hospitality and professional and business services. (See chart 2.) In contrast, private education and health services² added considerably more jobs in 2022 than in 2021, and goods-producing industries added slightly more jobs than in the previous year.³

Although total nonfarm employment recovered to its February 2020 level in June 2022, the major industry sectors showed different patterns. Some industries had previously recovered and continued to expand in 2022, some recovered and began to expand in 2022, and some have yet to recover to their prepandemic employment levels. (See chart 3.) In professional and business services, transportation and warehousing, financial activities, information, and utilities, employment recovered in 2020 or 2021 and continued to expand in 2022. In construction, wholesale trade, manufacturing, and private education and health services, employment recovered and began to expand in 2022. Finally, in leisure and hospitality, government, other services, mining and logging, and retail trade, December 2022 employment levels remained below February 2020 levels.

Continued employment expansion

Five major industry sectors recovered to their prepandemic employment levels prior to 2022 and continued to expand during the year: professional and business services, transportation and warehousing, financial activities, information, and utilities.

Professional and business services

Professional and business services had recovered from its pandemic-related job losses by August 2021. (See chart 4.) The industry added 745,000 jobs in 2022, a slowdown compared with the 1.4 million jobs added in 2021. By the end of 2022, employment in professional and business services had exceeded its prepandemic level by 1.4 million. Job growth over the year was driven by the component industry professional, scientific, and technical services, which added 491,000 jobs in 2022, compared with 689,000 in 2021. Employment in management of companies and enterprises increased by 65,000 in 2022, following an increase of 41,000 in 2021. Administrative and support and waste management and remediation services added 189,000 jobs in 2022, substantially less than the 629,000 jobs added in 2021. (See chart 5.)

Within professional, scientific, and technical services, job gains were led by management, scientific, and technical consulting services (+111,000); computer systems design and related services (+100,000); and architectural, engineering, and related services (+76,000).

Within administrative and support and waste management and remediation services, job gains in services to buildings and dwellings (+52,000), office administrative services (+48,000), and investigation and security services (+41,000) were partially offset by job losses in business support services (–50,000). Employment in temporary help services changed little (–30,000) in 2022, after increasing by 333,000 in 2021.The slowdown in 2022 coincided with weakness in the American Staffing Association’s Staffing Index over the year (+0.3 percent).⁴ Temporary help employment tends to be viewed as a leading economic indicator, and much of 2022 was characterized by economic uncertainty and fears of a recession.⁵

Transportation and warehousing

Employment in transportation and warehousing recovered to its prepandemic level prior to the end of 2020, and by December 2022, it was 919,000 above its February 2020 level. (See chart 6.) The industry added 261,000 jobs in 2022, less than half the number added in 2021 (+596,000). Slowing employment growth in transportation and warehousing coincided with little change over the year (–3.9 percent) in the Cass Freight Index, which measures shipment volumes in the United States and is used as a transportation indicator.⁶

Within transportation and warehousing, employment increased over the year in truck transportation (+61,000) and in air transportation (+44,000). (See chart 7.) Consistent with these employment gains, the American Trucking Associations’ Truck Tonnage Index increased in 2022 (+0.6 percent), as did air revenue passenger miles (+14.4 percent).⁷

The deceleration of job growth in transportation and warehousing in 2022 compared with 2021 was largely driven by employment trends in the component industries couriers and messengers and warehousing and storage. Both industries had thrived earlier in the pandemic, as consumers turned to e-commerce as a substitute for in-person shopping. However, as prepandemic shopping behaviors resumed and the percentage of e-commerce accounting for total retail sales began to trend downward, job growth in these two industries slowed.⁸ Employment in couriers and messengers changed little in 2022 (–14,000), compared with growth of 83,000 in 2021 and 176,000 in 2020. Employment in couriers and messengers reached a recent high in October 2022, but the industry lost 47,000 jobs, on net, in November and December. Employment in warehousing and storage increased by 81,000 in 2022, substantially down from increases of 282,000 in 2021 and 286,000 in 2020. Warehousing and storage employment reached a peak in June 2022, but the industry lost 27,000 jobs from June to December.

Elsewhere within transportation and warehousing, employment in transit and ground passenger transportation increased by 33,000 over the year, but the industry’s December 2022 employment level remained 65,000 below its February 2020 level. Employment in this industry has likely not recovered because of the increased flexibility of employees to work from home and decreased commuter-transit ridership resulting from the pandemic.⁹

Financial activities

By October 2021, financial activities had recovered its pandemic-related job losses. The industry added 166,000 jobs in 2022, compared with 215,000 in 2021. (See chart 8.) By the end of 2022, employment in financial activities had exceeded its prepandemic level by 232,000.

Over the year, job gains in financial activities were spread among insurance carriers and related activities (+56,000); real estate (+52,000); securities, commodity contracts, and funds (+43,000); and rental and leasing services (+29,000). (See chart 9.) In contrast, employment in credit intermediation and related activities changed little in 2022 (–16,000) and ended the year 31,000 below its most recent peak, in April 2021. Despite adding jobs over the year, rental and leasing services ended the year with an employment level that was 43,000 below its February 2020 level.

Economic indicators for financial activities were mostly negative in 2022. The federal funds rate increased by 4.02 percentage points during the year, as the Federal Reserve raised interest rates seven times in an effort to combat high inflation and slow economic growth.¹⁰ These increases followed little to no change in the rate in 2021. In 2022, the average 30-year fixed mortgage rate surged by 3.19 percentage points to 6.31 percent, increasing by a larger margin over the year than in any other year on record.¹¹ The mortgage-rate increases in 2022 followed historically low and little-changed mortgage rates in 2021. In addition, the Standard and Poor’s 500 index (or the “S&P 500”) posted a decline of about 15 percent in 2022, after increasing by more than 27 percent in 2021.¹²

Information

The information sector recovered to its prepandemic employment level in September 2021 and added 147,000 jobs in 2022, down from the 258,000 jobs the industry added in 2021. (See chart 10.) By the end of 2022, information employment had expanded by 212,000 above its February 2020 level. Within the industry, computing infrastructure providers, data processing, web hosting, and related services added 51,000 jobs, down from 68,000 jobs added in 2021. (See chart 11.) Employment in motion picture and sound recording industries changed little over the year (+17,000), after increasing by 147,000 in 2021 and declining by 140,000 in 2020. Employment in motion picture and sound recording industries, which had previously declined sharply because of mass movie-theater closures and production shutdowns related to the pandemic, ended the year above its prepandemic level.¹³

Utilities

Employment in utilities changed little in 2021 (+7,000) and in 2022 (+7,000), after pandemic-related employment losses had recovered by November 2021.

New employment recovery and expansion

Four major industry sectors recovered to their prepandemic employment levels and began to expand in 2022: construction, wholesale trade, manufacturing, and private education and health services.

Construction

Employment in construction returned to its February 2020 level in February 2022 and increased by 265,000 over the year, after increasing by 239,000 in 2021. (See chart 12.) By the end of 2022, construction employment was 251,000 above its February 2020 level.

All major component industries within construction added jobs in 2022, with gains concentrated in nonresidential specialty trade contractors (+83,000) and residential specialty trade contractors (+79,000). (See chart 13.) Consistent with the job growth in the industry, both nonresidential construction spending and residential construction spending increased over the year, by 16.5 percent and 1.1 percent, respectively.¹⁴

Despite over-the-year increases in construction employment, nonresidential construction spending, and residential construction spending, other construction-related economic indicators were negative in 2022, including housing starts (–22.5 percent), residential building permits (–29.5 percent), and new home sales (–25.5 percent).¹⁵ In addition, the National Association of Homebuilders/Wells Fargo Housing Market Index (HMI), at 31 in December 2022, declined by 53 points over the year. An HMI value of less than 50 indicates negative homebuilder sentiment.¹⁶ Homebuilders cited high inflation and the high mortgage-rate environment for the decline in homebuilder sentiment. Builders also noted a need to offer incentives, such as price reductions, in an effort to bolster home sales.¹⁷

Wholesale trade

The wholesale trade industry added 198,000 jobs in 2022, compared with 230,000 jobs added in 2021. (See chart 14.) Employment in the industry recovered to its prepandemic level in March 2022, and by December, it had expanded to 136,000 above its February 2020 level.

Employment gains in wholesale trade were led by merchant wholesalers of durable goods, which added 118,000 jobs in 2022. (See chart 15.) Employment in merchant wholesalers of nondurable goods increased by 54,000 over the year, while wholesale electronic markets and agents and brokers added 26,000 jobs.

Manufacturing

Manufacturing employment recovered to its prepandemic level in May 2022 and increased by 390,000 jobs over the year, nearly the same number as the 385,000 jobs added in 2021. (See chart 16.) By the end of the year, employment in manufacturing exceeded its prepandemic level by 189,000 and had expanded above its most recent peak in January 2019 by 141,000.

In 2022, job gains were widespread within durable goods manufacturing, led by transportation equipment manufacturing (+97,000), machinery manufacturing (+45,000), fabricated metal product manufacturing (+43,000), and computer and electronic product manufacturing (+31,000).

The gain in transportation equipment manufacturing was driven by an employment increase of 57,000 in motor vehicles and parts. Coincident with employment strength in the sector, motor vehicle production increased over the year (+5.4 percent).¹⁸ (See chart 17.) The global semiconductor shortage that began in early 2021 and persisted in 2022 prompted automakers to order a surplus of semiconductors in an effort to ensure inventory and safeguard production amid high demand.¹⁹ Related to these production demands, employment in semiconductors and other electronic component manufacturing, a component of computer and electronic product manufacturing, increased by 20,000 over the year.

Employment strength in durable goods manufacturing aligned with 2022 increases in new orders for manufactured durable goods.²⁰ The Purchasing Managers’ Index (PMI) of the Institute for Supply Management, at 48.4 percent in December 2022, contracted for a second consecutive month following a 29-month period of growth.²¹ A PMI lower than 50 percent indicates a contraction in manufacturing activity, while a PMI greater than 50 percent indicates an expansion in manufacturing activity. Although lower readings for November and December 2022 were reflected in manufacturing employment, which changed little during those months, both the PMI and manufacturing employment were consistently strong during the first 10 months of the year.

Among the component industries in nondurable goods manufacturing, employment increased over the year in food manufacturing (+56,000) and in chemical manufacturing (+32,000).

Private education and health services

Employment in private education and health services returned to its prepandemic level in September 2022, and by December it had expanded beyond that level by 251,000. Over the year, private education and health services added 935,000 jobs, up considerably from the 544,000 added in 2021.

Employment in health care grew by 556,000 in 2022, after changing little in 2021 (+31,000). (See chart 18.) The industry had recovered its pandemic-related job losses by October 2022, and by the end of the year, employment had expanded to 110,000 above its February 2020 level.

Within health care, employment gains were concentrated in ambulatory health care services, which added 307,000 jobs in 2022, compared with 234,000 in 2021. (See chart 19.) Among the components of ambulatory health care services, jobs were added over the year in offices of physicians (+94,000), home health care services (+63,000), offices of other health practitioners (+61,000), outpatient care centers (+40,000), and offices of dentists (+29,000).

Elsewhere in health care, employment in hospitals rose by 143,000 in 2022, following declines of 57,000 in 2021 and 64,000 in 2020. Nursing and residential care facilities added 105,000 jobs in 2022, following declines of 147,000 in 2021 and 260,000 in 2020. As of December 2022, employment in nursing and residential care facilities was 112,000 above its January 2022 trough, but it remained 306,000 below its November 2019 peak.

Social assistance added 226,000 jobs in 2022, compared with 179,000 jobs added in 2021. The industry recovered its pandemic-related job losses in September 2022, and by the end of the year, employment was 82,000 above its February 2020 level. Within the industry, job gains in 2022 were led by individual and family services (+150,000) and child care services (+60,000).

Private educational services recovered its pandemic-related job losses in July 2022, and by the end of the year, employment had expanded to 58,000 above its February 2020 level. (See chart 20.) The industry added 153,000 jobs in 2022, less than half of the 334,000 jobs gained in 2021.

Continued employment recovery

Five major industry sectors have not yet recovered from their pandemic-related employment losses: leisure and hospitality, government, other services, mining and logging, and retail trade.

Leisure and hospitality

Leisure and hospitality added 1.1 million jobs in 2022, down substantially from the 2.5 million jobs added in 2021. (See chart 21.) As of December 2022, total employment in the industry was 629,000 below its February 2020 level.

About two-thirds of the 2022 job growth in leisure and hospitality came from food services and drinking places, which added 702,000 jobs, compared with a gain of 1.6 million jobs in 2021. Food services and drinking places had lost 2.5 million jobs in 2020, and the industry's December 2022 employment level remained 267,000 below its February 2020 level. (See charts 22 and 23.) Consistent with the employment strength in 2022, sales in food services and drinking places increased by 13.9 percent over the year.²² Inflation may explain some of why employment in food services and drinking places has not recovered to its prepandemic level, as the Consumer Price Index for All Urban Consumers (CPI-U) rose 6.4 percent over the year.²³ In addition, CES average hourly earnings of all employees in food services and drinking places rose by 6.7 percent in 2022, increasing labor costs for employers and decreasing their ability to hire additional workers.

Elsewhere within leisure and hospitality, notable job gains occurred in accommodation (+173,000) and in amusement, gambling, and recreation industries (+140,000), with both industries showing a similar trend of slowing recovery in 2022 compared with 2021.

Government

Employment in government grew by 275,000 in 2022, compared with 385,000 in 2021. (See chart 24.) As of December 2022, government employment was 540,000 below its February 2020 level.

Job gains in 2022 were led by local government education (+154,000) and local government, excluding education (+145,000). (See chart 25.) As of December, employment in local government was 329,000 below its February 2020 level, with local government education accounting for 188,000 of those jobs. Similarly, employment in state government ended the year at 230,000 below its February 2020 level, with state government education accounting for 191,000 of those jobs. Over-the-year employment growth in state government education was somewhat hampered by a large university strike that was reflected in the December CES estimates.²⁴

Federal government employment was unchanged, on net, in 2022, following a loss of 22,000 in 2021.

Other services

Employment in other services rose by 185,000 in 2022, considerably less than the increase of 302,000 in 2021. As of December 2022, employment in other services was 142,000 below its February 2020 level. (See chart 26.)

Within other services, employment increased over the year in personal and laundry services (+84,000) and in religious, grantmaking, civic, professional, and similar organizations (+60,000), while employment changed little in repair and maintenance (+40,000). (See chart 27.) Job growth in 2022 slowed considerably in both personal and laundry services and repair and maintenance, which added 169,000 jobs and 72,000 jobs, respectively, in 2021.

Mining and logging

Since reaching a trough in February 2021, employment in mining and logging has risen by 87,000, with 49,000 of those jobs added in 2022. (See chart 28.) The 2022 gains were concentrated in support activities for mining (+36,000). As of December, employment in mining and logging was 58,000 below its February 2020 level and 119,000 below its most recent peak in January 2019. Because mining and logging employment is highly sensitive to fluctuations in oil prices, gains in 2022 were likely driven by over-the-year increases in the price of crude oil (measured by the price of West Texas Intermediate crude oil).²⁵