US Private Payrolls Rise 41,000 in December, Below Economist Expectations - ADP
The ADP report shows US private sector employment added 41,000 jobs in December, falling short of the 47,000 economist forecast but recovering from November's revised decline of 29,000 jobs. Policy uncertainty related to import tariffs and artificial intelligence integration are making businesses reluctant to expand hiring, while the unemployment rate is expected to ease to 4.50% in the upcoming official report.
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The U.S. private sector employment showed modest recovery in December, according to the latest ADP Research data released Wednesday. The report reveals a gradual improvement in hiring activity following November's decline, though momentum remains sluggish amid policy uncertainty and changing labor dynamics.
December Employment Performance
Private-sector payrolls increased by 41,000 jobs in December, representing a significant turnaround from the previous month's performance. However, the figure fell short of economist expectations, highlighting the tepid pace of current hiring conditions.
| Metric: | December | November | Reuters Estimate |
|---|---|---|---|
| ADP Private Jobs Change: | +41,000 | -29,000 | +47,000 |
| Month-over-Month Change: | +70,000 | - | - |
Market Context and Business Sentiment
The ADP report, jointly developed with the Stanford Digital Economy Lab, was released ahead of the Bureau of Labor Statistics' more comprehensive employment report due Friday. Economists surveyed by Reuters forecast private payrolls increased by 64,000 in December, with overall nonfarm payrolls estimated to have increased by 60,000.
Policy uncertainty, mostly related to import tariffs, has left businesses reluctant to increase their headcounts. Some employers are also integrating artificial intelligence in certain roles, diminishing the need for labor. Though job growth has slowed significantly amid weak demand for labor, layoffs remain relatively low by historical standards.
Employment Trends and Wage Growth
The December hiring showed mixed results across different industries. Education and health services led employment gains, alongside leisure and hospitality sectors. Conversely, professional services and manufacturing experienced payroll declines during the month.
Smaller businesses demonstrated resilience by resuming hiring after months of workforce reductions, while large employers pulled back on recruitment. Wage dynamics showed notable improvement in December, particularly for workers who changed jobs, with job switchers experiencing a 6.60% wage gain compared to 4.40% for job stayers.
Unemployment Rate Outlook
Attention is likely to focus on the unemployment rate in Friday's official report, which is projected to have eased to 4.50% after jumping to more than a four-year high of 4.60% in November. The November unemployment rate was partially distorted by the federal government shutdown, which also prevented the collection of household data for October.
The ADP report covers payrolls for more than 26 million US private-sector employees and has historically diverged from the government's private payrolls count in the official employment report.
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