A worker adjusts employment signage at a job and resource fair hosted by the Mountain Area Workforce Development Council in partnership with NCWorks in Hendersonville, North Carolina, U.S., on Tuesday, Nov. 19, 2024.
Allison Joyce | Bloomberg | Getty Images
Private sector jobs fell more than expected in December and wages grew at their slowest pace in nearly three and a half years, payment processing company ADP said Wednesday.
Companies added a seasonally adjusted 122,000 jobs for the month, down from 146,000 in November and less than the Dow Jones consensus estimate of 136,000. It was the smallest gain since August.
On the payroll side, wages grew at a rate of 4.6% a year earlier, the slowest pace since July 2021.
“In the last month of 2024, the labor market slowed to a more modest pace of growth, with both employment and wage growth slowing,” said Nela Richardson, ADP chief economist.
While there are signs that hiring is slowing, there is little indication that layoffs are increasing.
The Labor Department reported Wednesday that initial unemployment claims totaled just 201,000 for the week ending Jan. 4. That's well below the estimate of 215,000 and the lowest level since February 2024.
The reports come two days before the Bureau of Labor Statistics' closely watched nonfarm payroll numbers. Economists polled by Dow Jones expect the report to show an increase of 155,000, which itself would represent a sharp slowdown from An unexpectedly strong 227,000 in November. ADP and BLS numbers often differ, sometimes by wide margins.
Federal Reserve policymakers are closely watching employment data as they plan their next monetary policy moves. While most Fed officials said they believe the labor market is robust, they want to keep interest rates at less restrictive levels 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. ADP data may further confirm the belief that wages do not exert inflationary pressure.
From the sector's point of view, the most jobs were created in the education and health services category, which added 57,000 positions. Other significant gains were recorded 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, or 97,000.