A worker at a restaurant at Grand Central Market in Los Angeles, California, US, on Thursday, Nov. 2, 2023.
Eric Thayer | Bloomberg | Getty Images
Hiring in the private sector rose at a faster than expected pace in December, closing out a strong 2023 for the resilient U.S. jobs market, ADP reported Thursday.
Private payrolls increased by 164,000 for the month, a substantial increase from the downwardly revised 101,000 in November and better than the 130,000 estimate from the Dow Jones consensus, according to the payrolls processing firm.
In another sign of strength, initial jobless claims fell for the last full week of 2023, indicating the labor market remains tight and vibrant and that companies are reluctant to lay off workers.
A rebound in leisure and hospitality led the way, as the sector added 59,000, ADP reported. Hotels, restaurants, bars and similar establishments had led the way in job creation after getting eviscerated in the early days of the Covid pandemic, but job creation in the industry tailed off in recent months. The sector also led in wage gains, with annual growth of 6.4%.
Construction contributed 24,000 to the total, while the other services category, which includes dry cleaning and other support businesses, added 22,000. Financial activities increased 18,000.
There were only a few categories down on the month, with manufacturing off 13,000 and information services and natural resources and mining both seeing a decline of 2,000.
The pace of earnings growth decelerated again, with those staying in their job seeing annual pay increases of 5.4% while job changers saw earnings increase 8%, ADP said.
“We’re returning to a labor market that’s very much aligned with pre-pandemic hiring,” ADP chief economist Nela Richardson said. “While wages didn’t drive the recent bout of inflation, now that pay growth has retreated, any risk of a wage-price spiral has all but disappeared.”
From a size perspective, companies with fewer than 50 employees led with 74,000 new jobs. Geographically, the West saw an increase of 109,000 while the Northeast added 94,000.
The ADP release comes a day ahead of the Labor Department’s more closely watched nonfarm payrolls count, and the two reports can differ substantially due to differences in methodology. Economists surveyed by Dow Jones expect December nonfarm payroll growth of 170,000, after November’s 199,000, which was nearly double the ADP estimate.
Federal Reserve officials are watching the jobs reports closely for clues on the labor market and its impact on inflation. According to minutes released Wednesday from the December meeting of the Federal Open Market Committee, the central bank’s rate-setting panel, officials see the labor market coming better into balance from the huge supply-demand mismatch over the past few years.
In related news, initial jobless claims for the week ended Dec. 30 totaled 202,000, a drop of 18,000 from the previous period and below the Dow Jones estimate for 219,000, the Labor Department reported. That was the lowest total since mid-October and counter to expectations that the labor market is starting to soften.
Continuing claims, which run a week behind, fell to 1.855 million, a drop of 31,000.
Source link: https://www.cnbc.com/2024/01/04/private-payrolls-added-164000-in-december-beating-expectations-adp-says.html