A worker adjusts employment signs at a job and resource fair hosted by the Mountain Area Workforce Development Board in partnership with NCWorks in Hendersonville, North Carolina, U.S., Tuesday, Nov. 19, 2024.
Allison Joyce | Bloomberg | Getty Images
Private-sector job creation fell more than expected in December, while wages rose at the slowest pace in nearly three and a half years, payments processor ADP reported Wednesday.
Companies added a seasonally adjusted 122,000 jobs this month, down from 146,000 in November and short of the Dow Jones consensus forecast of 136,000. It was the smallest increase since August.
On the wage front, wages grew at a 4.6% rate from last year, the slowest pace since July 2021.
“The labor market eased to a more modest pace of growth in the final month of 2024, with hiring and wage gains slowing,” said ADP Chief Economist Nela Richardson.
While there are signs that hiring is slowing, there is little indication that layoffs are increasing.
The Labor Department reported on Wednesday that initial claims for unemployment insurance totaled just 201,000 in 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 closely watched counting of payrolls for non-agricultural activities from the Bureau of Labor Statistics. Economists polled by Dow Jones expected the report to show a rise of 155,000, which in itself would mark a sharp slowdown from In November, an unexpectedly strong 227,000. ADP and BLS numbers often differ, sometimes by large differences.
Federal Reserve policymakers are watching the jobs numbers closely as they plot their next moves for monetary policy. While most Fed officials have said they believe the labor market is solid, they are trying to keep interest rates less restrictive so as not to jeopardize job creation.
They also expressed more confidence that inflation has stabilized even though it is still above the Fed’s 2% target. The ADP numbers could confirm that wages are not putting pressure on inflation.
From a sector perspective, job gains were largest in the education and health services category, which added 57,000 jobs. Other significant gains were made in construction (27,000), leisure and catering (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 totaled 97,000.
