‘The labor market downshifted to a more modest pace of growth in the final month of 2024,’ said ADP’s chief economist.
Private-sector hiring growth slowed in December 2024 as the U.S. labor market continued moderating.
According to ADP’s National Employment Report, December payrolls increased by 122,000, down from the 146,000 increase in November. This represented the smallest increase in four months.
Last month’s reading fell short of the consensus estimate of 140,000.
The majority of private-sector job creation occurred in education and health care services (57,000), leisure and hospitality (22,000), and financial activities (12,000).
For the third month in a row, manufacturing employment decreased, shedding 11,000 jobs. Meanwhile, natural resources and mining experienced a decline of 6,000 jobs, and professional and business services lost 5,000 jobs.
Nearly all new jobs were from large companies with more than 500 employees (97,000).
Wage growth continued to slow in the final month of 2024. Annual pay growth for job stayers eased to 4.6 percent, the lowest annual growth since July 2021. Earnings growth for job changers remained unchanged at 7.1 percent.
This could further support the Federal Reserve’s view that wage growth is not fueling recent inflationary pressures.
“The labor market downshifted to a more modest pace of growth in the final month of 2024, with a slowdown in both hiring and pay gains,” Nela Richardson, chief economist at ADP, said in a statement. “Health care stood out in the second half of the year, creating more jobs than any other sector.”
The ADP data were published before the Bureau of Labor Statistics’ December jobs report, which will be released on Jan. 10.
While market watchers examine the independent monthly private sector employment snapshot, these two reports are unconnected.
Over the past year, ADP has slightly overstated private payroll growth compared to the federal government.
In the first 11 months of 2024, the ADP reported 1.7 million private sector jobs. By comparison, the BLS reported 1.572 million private sector jobs.
By Andrew Moran
