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A worker sets up hiring signs at a job and resource fair hosted by the Mountain Area Workforce Development Council in partnership with NCWorks in Hendersonville, North Carolina, U.S., Tuesday, Nov. 19, 2024.
Alison Joyce | Bloomberg | Getty Images
Payments processor ADP reported on Wednesday that private sector job creation fell more than expected in December, while wages rose at the slowest pace in nearly 3 1/2 years.
Companies added a seasonally adjusted 122,000 jobs in the month, down from 146,000 in November and less than the Dow Jones consensus forecast of 136,000. It was the smallest gain since August.
Wages rose 4.6% from a year earlier, the slowest pace since July 2021.
“The labor market eased to a more modest pace of growth in the final month of 2024, with both hiring and wage growth slowing,” said ADP Chief Economist Nella Richardson.
While there are signs that hiring is slowing, there is little sign that layoffs are increasing.
The Labor Department said Wednesday that initial claims for unemployment insurance were just 201,000 for the week ended Jan. 4. This is well below the estimate of 215,000 and the lowest level since February 2024.
The reports come two days before the nonfarm payrolls count, which is closely watched by the Bureau of Labor Statistics. Economists polled by Dow Jones expected the report to show growth of 155,000 points, which in itself would represent a sharp slowdown November’s unexpectedly high 227,000. ADP and BLS numbers often differ, sometimes by a wide margin.
Federal Reserve policymakers are watching the jobs numbers closely as they plan their next steps in monetary policy. While most Fed officials have said they believe the labor market is strong, they are seeking to keep interest rates less restrictive so as not to threaten job creation.
They also expressed more confidence that inflation has stabilized, although it is still above the Fed’s 2% target. The ADP numbers may confirm that wages are not putting pressure on inflation.
From a sector perspective, job creation was strongest in the education and health services category, which added 57,000 jobs. Other significant gains were made in construction (27,000), leisure and hospitality (22,000) and financial activities (12,000).
Several sectors reported job losses, including manufacturing (-11,000), natural resources and mining (-6,000), and professional and business services (-5,000).
Almost all jobs came from large companies with more than 500 employees, which amounted to 97,000.
