ADP National Employment Report: Private Sector Employment Increased by 122,000 Jobs in December; Annual Pay was Up 4.6%

Rhea-AI Summary

ADP's National Employment Report shows private sector employment increased by 122,000 jobs in December 2024, with annual pay rising 4.6% year-over-year. The report highlights a slowdown in both hiring and pay gains, with health care emerging as the leading sector for job creation in the second half of 2024.

Key sector changes include: goods-producing sectors added 10,000 jobs, while service-providing sectors contributed 112,000 positions. Manufacturing declined for the third consecutive month, losing 11,000 jobs. The West region led employment growth with 82,000 new jobs. Large establishments (500+ employees) dominated hiring with 97,000 new positions.

Pay insights reveal job-stayers' wage growth slowed to 4.6%, the lowest since July 2021, while job-changers saw a 7.1% increase, slightly down from November. The report is based on actual payroll data from over 25 million U.S. employees.

Positive

• Private sector added 122,000 new jobs
• Annual pay increased 4.6% year-over-year
• Service-providing sectors added 112,000 jobs
• Healthcare sector showed strong job creation
• Large establishments (500+ employees) added 97,000 jobs

Negative

• Overall hiring pace showed significant slowdown
• Manufacturing sector declined for third straight month (-11,000 jobs)
• Pay growth decelerated to slowest pace since July 2021
• Job-changers' pay growth declined from previous month
• Professional/business services lost 5,000 jobs

Insights

Labor Market Economist

The December employment data reveals a notable deceleration in the private sector labor market. The addition of 122,000 jobs, down from November's 146,000, coupled with cooling wage growth at 4.6% for job-stayers, signals a clear moderation in labor market dynamics. The healthcare sector's resilience stands out, contributing significantly to job creation amid broader market softening.

The sectoral breakdown shows concerning trends in manufacturing, with a third consecutive month of job losses (-11,000). The regional disparity is striking - the West region added 82,000 jobs while other regions showed modest gains, highlighting geographical labor market imbalances. Large establishments (500+ employees) dominated hiring with 97,000 new positions, while smaller businesses struggled to expand their workforce.

The gap between job-stayer (4.6%) and job-changer (7.1%) wage growth continues to narrow, suggesting reduced pressure on employers to retain talent through aggressive compensation increases. This wage growth moderation aligns with the Federal Reserve's inflation-fighting objectives.

Market Research Analyst

For ADP's business model, this report presents mixed implications. The company's position as the leading payroll processor means slower employment growth could impact revenue growth potential. However, the continued wage increases, albeit at a slower pace, still support ADP's percentage-based fee structure on payroll processing.

The sustained demand for healthcare workers, evidenced by the sector's leading job creation, represents a valuable growth opportunity for ADP's specialized HR solutions. The regional hiring variations, particularly the West's strong performance, suggest targeted market opportunities for ADP's services.

The divergence between large and small business hiring patterns - with large enterprises adding 97,000 jobs while small businesses only added 5,000 - indicates a potential need for ADP to strengthen its small business segment offerings. This could include enhanced tools for recruitment and retention in a challenging labor market.

ROSELAND, N.J., Jan. 8, 2025 /PRNewswire/ -- Private sector employment increased by 122,000 jobs in December and annual pay was up 4.6 percent year-over-year, according to the December ADP^® National Employment Report™ produced by ADP Research in collaboration with the Stanford Digital Economy Lab ("Stanford Lab"). The ADP National Employment Report is an independent measure and high-frequency view of the private-sector labor market based on actual, anonymized payroll data of more than 25 million U.S. employees.

The jobs report and pay insights use ADP's fine-grained anonymized and aggregated payroll data to provide a representative picture of the private-sector labor market. The report details the current month's total private employment change, and weekly job data from the previous month. Because the underlying ADP payroll databases are continuously updated, the report provides a high-frequency, near real-time measure of U.S. employment. This measure reflects the number of employees on ADP client payrolls (Payroll Employment) to provide a richer understanding of the labor market. ADP's pay measure uniquely captures the earnings of a cohort of almost 10 million employees over a 12-month period.

"The labor market downshifted to a more modest pace of growth in the final month of 2024, with a slowdown in both hiring and pay gains," said Nela Richardson, chief economist, ADP. "Health care stood out in the second half of the year, creating more jobs than any other sector."

December 2024 Report Highlights*

View the ADP National Employment Report and interactive charts at www.adpemploymentreport.com.

JOBS REPORT

Private employers added 122,000 jobs in December
Hiring slowed in several industries. Employment in manufacturing shrank for the third straight month.

Change in U.S. Private Employment:     122,000

Change by Industry Sector

- Goods-producing:     10,000

• Natural resources/mining     -6,000
• Construction     27,000
• Manufacturing     -11,000

- Service-providing:     112,000

• Trade/transportation/utilities     8,000
• Information     5,000
• Financial activities     12,000
• Professional/business services     -5,000
• Education/health services     57,000
• Leisure/hospitality     22,000
• Other services     13,000

Change by U.S. Regions

- Northeast:     19,000

• New England     6,000
• Middle Atlantic     13,000

- Midwest:     7,000

• East North Central     -2,000
• West North Central     9,000

- South:     19,000

• South Atlantic     -1,000
• East South Central     4,000
• West South Central     16,000

- West:     82,000

• Mountain     26,000
• Pacific     56,000

Change by Establishment Size

- Small establishments:     5,000

• 1-19 employees     -1,000
• 20-49 employees     6,000

- Medium establishments:      9,000

• 50-249 employees     -2,000
• 250-499 employees     11,000

- Large establishments:     97,000

• 500+ employees     97,000

PAY INSIGHTS

Pay gains slowed in December
Year-over-year pay growth for job-stayers slowed to 4.6 percent, the slowest pace of gains since July 2021. Pay growth for job-changers was 7.1 percent, a slight decline from November.

Median Change in Annual Pay (ADP matched person sample)

- Job-Stayers     4.6%

- Job-Changers     7.1%

Median Change in Annual Pay for Job-Stayers by Industry Sector

- Goods-producing:                                                       

• Natural resources/mining     3.8%
• Construction     5.1%
• Manufacturing     4.5%

- Service-providing:                                               

• Trade/transportation/utilities     4.4%
• Information     4.4%
• Financial activities     4.9%
• Professional/business services     4.5%
• Education/health services     4.9%
• Leisure/hospitality     4.6%
• Other services     4.7%

Median Change in Annual Pay for Job-Stayers by Firm Size

- Small firms:                                                                

• 1-19 employees     3.9%
• 20-49 employees     4.6%

- Medium firms:                                                             

• 50-249 employees     4.8%
• 250-499 employees     4.8%

- Large firms:                                                                

• 500+ employees     4.6%

To see Pay Insights by U.S. State, Gender, and Age for Job-Stayers, visit here:

* Sum of components may not equal total due to rounding.

The November total number of jobs added remained unchanged at 146,000. The historical data file and weekly data for the previous month are available at https://adpemploymentreport.com/.

To subscribe to monthly email alerts or obtain additional information about the ADP National Employment Report, including employment and pay data, interactive charts, methodology, and a calendar of release dates, please visit https://adpemploymentreport.com/.    

The January 2025 ADP National Employment Report will be released at 8:15 a.m. ET on February 5, 2025.

About the ADP® National Employment Report™
The ADP National Employment Report is an independent measure of the change in U.S. private employment and pay derived from actual, anonymized payroll data of client companies served by ADP, a leading provider of human capital management solutions. The report is produced by ADP Research in collaboration with the Stanford Digital Economy Lab.

The ADP National Employment Report is broadly distributed to the public each month, free of charge, as part of the company's commitment to offering deeper insights of the U.S. labor market and providing businesses and governments with a source of credible and valuable information.

About the ADP Research
The mission of ADP Research is to make the future of work more productive through data-driven discovery. Companies, workers, and policymakers rely on our finely tuned data and unique perspective to make informed decisions that impact workplaces around the world.

About ADP (NASDAQ – ADP)
Designing better ways to work through cutting-edge products, premium services and exceptional experiences that enable people to reach their full potential.  HR, Talent, Time Management, Benefits and Payroll. Informed by data and designed for people.   Learn more at ADP.com

ADP, the ADP logo, and Always Designing for People, ADP National Employment Report, ADP Research Institute and ADP Research are trademarks of ADP, Inc. All other marks are the property of their respective owners.

Copyright © 2025 ADP, Inc. All rights reserved.

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SOURCE ADP, Inc.

FAQ

How many private sector jobs did ADP report for December 2024?

ADP reported an increase of 122,000 private sector jobs in December 2024.

What was the annual pay increase according to ADP's December 2024 report?

The annual pay increased by 4.6% year-over-year for job-stayers.

Which sector showed the biggest job losses in ADP's December 2024 report?

Manufacturing showed the biggest losses, declining by 11,000 jobs, marking its third straight month of decline.

What was the job growth difference between small and large businesses in ADP's December report?

Large businesses (500+ employees) added 97,000 jobs, while small establishments (1-49 employees) added only 5,000 jobs.

How much higher was the pay growth for job-changers compared to job-stayers in December 2024?

Job-changers' pay growth was 7.1%, which was 2.5 percentage points higher than job-stayers at 4.6%.