In December 2024, private sector job creation slowed more than anticipated, with ADP reporting an addition of 122,000 jobs, down from 146,000 in November and falling short of the forecasted 136,000. This marks the smallest increase since August. Wage growth also decelerated to 4.6% year-over-year, the slowest rate since July 2021. According to ADP’s chief economist Nela Richardson, the labor market decelerated in hiring and pay increases during the final month of the year. This report precedes the Bureau of Labor Statistics’ nonfarm payroll count, expected to show a gain of 155,000 positions, a notable decline from November’s strong 227,000.
The Federal Reserve is closely monitoring these labor statistics as it formulates its monetary policy, maintaining a cautious approach to prevent hindrance to job creation while expressing optimism that inflation may be stabilizing. Job creation was strongest in education and health services (57,000 positions), with construction, leisure and hospitality, and financial activities also seeing gains. However, losses were reported in sectors such as manufacturing and professional services. The bulk of job gains were concentrated in larger companies, with firms employing over 500 workers contributing 97,000 to the tally.
