A worker adjusts a recruitment sign at the Mountain Workforce Development Council’s Career and Resource Expo in partnership with NCWorks on Tuesday, Nov. 19, 2024, in Hendersonville, North Carolina, USA.
Alison Joyce | Bloomberg | Getty Images
Payment processing company ADP reported on Wednesday that private sector job creation slowed more than expected in December, while wages grew at the slowest pace in nearly three-and-a-half years.
On a seasonally adjusted basis, companies added 122,000 jobs this month, down from 146,000 in November and below the Dow Jones average forecast of 136,000. It was the smallest increase since August.
In terms of wages, wages increased by 4.6% annually, the lowest growth rate since July 2021.
ADP chief economist Nela Richardson said: “The labor market growth slowed in the last month of 2024, with both hiring and wage growth slowing.”
While there are signs that hiring is slowing, there are few signs that layoffs are increasing.
The U.S. Department of Labor reported on Wednesday that only 201,000 people filed initial claims for unemployment benefits in the week ended January 4.
The report comes two days ahead of nonfarm payrolls data, which is closely watched by the Bureau of Labor Statistics. Economists polled by Dow Jones expected the report to show a gain of 155,000, which itself would mark a sharp slowdown from November’s unexpectedly strong 227,000 gain. ADP and BLS numbers often differ, sometimes significantly.
Federal Reserve policymakers are paying close attention to the employment data as they formulate their next steps in monetary policy. While most Fed officials say they believe the labor market is solid, they want to lower interest rate limits so as not to threaten job creation.
They also expressed greater confidence that inflation has stabilized, although it remains above the Fed’s 2% target. The ADP data may provide further evidence that wages are not weighing on inflation.
From a sectoral perspective, job creation was strongest in the education and health services category, with 57,000 new positions added. Other notable increases came from construction (27,000), leisure and hospitality (22,000) and financial activities (12,000).
Several industries reported job losses, including manufacturing (-11,000), natural resources and mining (-6,000), and professional and business services (-5,000).
Almost all jobs are in large companies with more than 500 employees, totaling 97,000 people.
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