Michelle Thompson- In December, companies added a seasonally adjusted 122,000 jobs, a decline from November’s 146,000 and below the Dow Jones forecast of 136,000.
- Wage growth slowed to 4.6% year-over-year, marking its lowest rate since July 2021.
Private sector job growth in December was weaker than anticipated, with wages increasing at their slowest rate in nearly three and a half years, according to ADP’s report released Wednesday.
Businesses created a seasonally adjusted 122,000 jobs, a decrease from November’s 146,000 and below the Dow Jones estimate of 136,000. This was the smallest increase since August. Wage growth moderated to 4.6% year-over-year, its slowest pace since July 2021.
ADP’s chief economist, Nela Richardson, noted that the labor market experienced a “modest pace of growth” in December, with declines in both hiring and pay growth. Despite slowing job creation, there is little evidence of a rise in layoffs.
The Labor Department reported 201,000 initial unemployment claims for the week ending January 4, far below the forecasted 215,000 and the lowest figure since February 2024.
These figures come ahead of Friday’s Bureau of Labor Statistics (BLS) nonfarm payrolls report, which is projected to show 155,000 new jobs, a notable drop from November’s unexpectedly high 227,000. ADP and BLS numbers often differ significantly.
Federal Reserve policymakers are closely monitoring job trends as they assess monetary policy adjustments. While the Fed views the labor market as strong, officials aim to maintain less restrictive interest rates to avoid stifling job creation. Additionally, they see wage growth as less of a driver of inflation, which remains above the Fed’s 2% target.
In December, job gains were strongest in education and health services (57,000), construction (27,000), leisure and hospitality (22,000), and financial activities (12,000). Conversely, sectors like manufacturing (-11,000), natural resources and mining (-6,000), and professional and business services (-5,000) reported losses.
Large companies, defined as those with over 500 employees, accounted for most of the hiring, contributing 97,000 jobs.
Emily Martinez