The U.S. announced on Thursday (5th) the U.S. ADP employment report known as “small non-agricultural”. The market is strong.
The employment growth was concentrated in companies with fewer than 500 employees. Large companies cut 151,000 workers, the most since April 2020. Leisure and restaurants, education and health services, professional and business services, and construction led job growth.
ADP chief economist Nela Richardson said in a statement that the labor market was strong but fragmented, with hiring varying by industry and firm size. Business units that hired aggressively in the first half of last year have slowed down and in some cases cut jobs in the last month of the year.
The ADP data suggest that the labor market, while cooling in some areas, remains strong. Despite popular fears that a recession is looming, demand for labor far exceeds supply, putting upward pressure on wages and financing continued spending by consumers. Layoffs remain extremely low and vacancies remain at peak levels.
It is worth noting that the report also re-examined the wage growth situation of the month, which is the focus and concern of the Federal Reserve (Fed) when fighting inflation. Fed Chairman Jerome Powell has pointed to wages as the main driver of price growth in services excluding housing and energy, and the main factor affecting the overall inflation outlook.
In a welcome sign for the Fed, ADP data showed wage growth decelerated sharply in December. Wages for those who changed jobs rose 15.2 percent, the lowest in 10 months, while those who stayed in their jobs saw a median annual pay increase of 7.3 percent, down from 7.6 percent in November.