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A worker adjusts hiring signage at a job and resource fair hosted by the Mountain Force Development Council in partnership with NCWorks in Hendersonville, North Carolina, U.S., Tuesday, Nov. 19, 2024.
Allison Joyce | Bloomberg | Getty Images
Private sector job creation slowed more than expected in December while wages grew at the slowest pace in nearly three and a half years, payroll processing company ADP said Wednesday.
Companies added 122,000 seasonal jobs for the month, down from 146,000 additions in November and less than the Dow Jones consensus forecast for 136,000. It was the smallest increase since August.
On wages, wages grew at a rate of 4.6% from a year ago, the slowest rate since July 2021.
“The labor market slowed to a more modest pace of growth in the final month of 2024, with both hiring and wage gains slowing,” said ADP Chief Economist Nela Richardson. .
Although there are signs that hiring is slowing, there have been few signs that layoffs are increasing.
The Labor Department on Wednesday said initial claims for unemployment insurance were just 201,000 for the week ending January 4. That was well below the estimate of 215,000 and the lowest level since February 2024.
The reports come two days before nonfarm payrolls closely watched by the Bureau of Labor Statistics. Economists polled by Dow Jones expected the report to show a gain of 155,000, which in itself would mark a sharp slowdown from November is unexpectedly strong 227,000. ADP and BLS numbers often differ, sometimes by large margins.
Federal Reserve policymakers are watching the jobs numbers closely as they plan their next moves for monetary policy. While most Fed officials said they believe the labor market is solid, they are trying 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 could add to the case that wages are not keeping up with inflation.
From a sector perspective, job creation was strongest in the education and health services category, which added 57,000 positions. Other significant gains came in construction (27,000), entertainment 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 workers, which amounted to 97,000.
