A worker adjusts recruitment signs at a job and resource fair hosted by the Mountain Workforce Development Council in partnership with NCWorks in Hendersonville, North Carolina, US, on Tuesday, November 19, 2024.
Alison Joyce | Bloomberg | Getty Images
Private sector job creation fell more than expected in December, while wages grew at the slowest pace in nearly three-and-a-half years, payments processing company ADP said Wednesday.
Companies added a seasonally adjusted 122,000 jobs for the month, down from 146,000 jobs in November and below Dow Jones' forecast of 136,000 jobs. This was the smallest increase since August.
Regarding wages, wages rose at a rate of 4.6% compared to last year, the slowest pace since July 2021.
“The labor market has shifted to a more modest pace of growth in the last month of 2024, with a slowdown in hiring and wage gains,” said Nella Richardson, chief economist at ADP.
Although there are signs that hiring is slowing, there are a few indicators that layoffs are on the rise.
Initial claims for unemployment insurance totaled just 201,000 for the week ending Jan. 4, the Labor Department reported Wednesday. That was well below the estimate of 215,000 and the lowest level since February 2024.
The reports come two days before the release of the closely watched nonfarm payrolls report from the Bureau of Labor Statistics. Economists polled by Dow Jones expect this report to show a gain of 155,000 points, which in itself represents a sharp slowdown from November unexpectedly strong 227,000. ADP and BLS numbers often differ, sometimes by large margins.
Federal Reserve policymakers are watching jobs numbers closely as they plan their next monetary policy moves. While most Fed officials said they believe the labor market is strong, they are looking to keep interest rates less restrictive so as not to threaten job creation.
They also expressed more confidence that inflation has stabilized although it remains above the Fed's 2% target. The ADP numbers could add to the case that wages are not putting pressure on inflation.
From a sector perspective, job creation was strongest in the educational and health services category, adding 57,000 jobs. Other significant gains came in the construction (27,000), leisure and hospitality (22,000), and financial activities (12,000) sectors.
Several sectors reported job losses, including manufacturing (-11,000), natural resources and mining (-6,000) and professional and business services (-5,000).
Almost all the jobs came from large companies with more than 500 workers, or up to 97,000.
