ADP: December Private Payrolls Increased by 41,000, Missing Expectations

• All job growth came from services industries (education/health added 39,000, leisure/hospitality added 24,000) while goods-producing sectors lost 3,000 jobs including 5,000 in manufacturing
• Small and mid-sized companies (under 500 workers) drove nearly all hiring while large employers added only 2,000 positions
• Wage growth remained moderate at 4.4% annually for job stayers and 6.6% for job changers, with official BLS employment data expected Friday showing 73,000 total new jobs

Summary: ADP December Private Payrolls Report

Key Figures:

U.S. private sector employment added 41,000 jobs in December, below the Dow Jones consensus estimate of 48,000. This represents a reversal from November's revised loss of 29,000 jobs (initially reported as -32,000). Private payrolls had declined in three of the four months preceding December.

Sector Performance:

Job growth was concentrated entirely in services industries:

• Education and health services: +39,000
• Leisure and hospitality: +24,000
• Trade, transportation, and utilities: +11,000
• Financial services: +6,000

Sectors posting losses included professional and business services (-29,000) and information services (-12,000). Goods-producing industries lost 3,000 jobs, primarily driven by a 5,000 decline in manufacturing.

Company Size Breakdown:

Small and medium-sized businesses (under 500 employees) accounted for nearly all hiring, adding 39,000 jobs. Large employers contributed only 2,000 positions, indicating a pullback among major corporations.

Wage Growth:

Annual wage increases remained moderate at 4.4% for workers staying in their positions (unchanged from November). Job changers experienced higher gains of 6.6%, up 0.3 percentage points from the prior month.

Market Implications:

The softer-than-expected December data suggests continued labor market weakness heading into 2025. ADP Chief Economist Nela Richardson noted small businesses recovered from November losses while large employers retreated. This precedes Friday's official BLS nonfarm payrolls report, which is expected to show 73,000 new jobs with unemployment declining to 4.5%.