U.S. private sector hiring and wage growth slowed in December, indicating a continued moderation in demand for workers.
The number of jobs increased by 122,000 last month (the fewest in four months) after an increase of 146,000 in Novemberaccording to data from the ADP Research Institute published Wednesday. The median projection in a Bloomberg survey of economists expected an increase of 140,000.
The report showed that job growth was uneven across industries. The education and health, construction, as well as leisure and hospitality sectors recorded the largest increases. Manufacturing, natural resources and mining, as well as professional and business services, recorded declines in workforce.
Wednesday’s figures suggest that the gradual weakening of the US labor market in 2024 will extend until the end of the year. Federal Reserve policymakers will have to balance that trend with renewed inflation fears when deciding how far to continue cutting interest rates in 2025 and beyond.
“The labor market shifted to a more modest pace of growth in the final month of 2024, with a slowdown in both hiring and wage gains,” said Nela Richardson, chief economist at ADP.
The ADP report, published in collaboration with the Stanford Digital Economy Lab, showed that wage growth cooled further. Workers who changed jobs saw a 7.1% wage increase, while those who stayed in their jobs saw a 4.6% increase, the slowest since mid-2021. ADP bases its findings on payrolls covering more than 25 million U.S. private sector employees.
The West was the main driver of job creation by region, while companies with at least 500 employees accounted for the vast majority of job creation last month.
Separate data released Wednesday by the Labor Department showed initial claims for unemployment insurance fell to 201,000 in the week through Jan. 4, the lowest level since February. Meanwhile, recurring applications in the previous week amounted to 1.87 million. Data can be irregular from week to week, especially around the holidays.
The government’s monthly employment report due Friday is projected to show that payrolls, including government jobs, will increase by 163,000 in December after an increase of 227,000 in November.
