ADP National Employment Report: Private Sector Employment Increased by 164,000 Jobs in December; Annual Pay was Up 5.4%

Rhea-AI Summary

ADP National Employment Report shows private sector employment increased by 164,000 jobs in December 2023, with annual pay up 5.4% year-over-year. The report provides a detailed breakdown of job gains by industry sector, U.S. region, and establishment size, as well as insights into pay growth for job-stayers and job-changers.

Economist

The recent ADP National Employment Report indicating an increase of 164,000 private sector jobs in December suggests a steady growth in the labor market. This growth trajectory, particularly in the leisure and hospitality sector, coupled with strong performance in construction despite high interest rates, presents a nuanced picture of economic resilience. However, the manufacturing sector's continued job losses are a cause for concern, reflecting possible sector-specific challenges or broader economic headwinds. The regional disparities, with the Northeast and West showing gains while the Midwest and South experience declines, underscore the uneven nature of economic recovery across the United States.

From a macroeconomic perspective, the deceleration in pay growth from 5.6% to 5.4% for job-stayers may indicate a cooling of wage inflation pressures, aligning with the economist Nela Richardson's assessment that the risk of a wage-price spiral is diminishing. The differentiation in pay growth between job-stayers and job-changers, with the latter seeing higher increases, could signal a competitive job market where movement is rewarded, potentially influencing labor market dynamics and employee retention strategies.

Financial Analyst

The data on private sector employment growth and wage trends can have significant implications for financial markets. Investors typically monitor employment reports closely as they can influence central bank policy decisions. The moderate job growth and the slowing wage inflation may suggest to investors that the Federal Reserve could adopt a less aggressive stance on interest rate hikes, which generally would be positively received by equity markets. However, investors should also consider the underlying sectoral and regional trends, as these can impact specific industries and geographically-focused investments differently.

Furthermore, the report's findings on pay growth, particularly in sectors like leisure/hospitality and construction, may affect consumer spending patterns, which in turn could influence corporate earnings forecasts and stock valuations. Companies that are able to navigate the current labor market effectively, by attracting and retaining talent without excessively increasing labor costs, may be viewed favorably by investors seeking sustainable profit margins.

Market Research Analyst

Assessing the ADP National Employment Report from a market research perspective, the sustained job growth in certain sectors such as leisure and hospitality indicates evolving consumer behavior post-pandemic and the potential for continued recovery in these areas. The report's insights into pay trends are also crucial for businesses in setting competitive compensation strategies to attract and retain talent. The regional and establishment size breakdowns provide actionable data for businesses planning expansion or investment, highlighting areas of growth potential and caution.

Additionally, the labor market dynamics reflected in the report can guide businesses in forecasting demand for goods and services. For instance, the increase in construction jobs despite high interest rates could suggest ongoing investments in infrastructure or real estate development, which may have downstream effects on related industries. Conversely, the job losses in manufacturing could signal a need for companies in this sector to innovate or restructure to remain competitive.

ROSELAND, N.J., Jan. 4, 2024 /PRNewswire/ -- Private sector employment increased by 164,000 jobs in December and annual pay was up 5.4 percent year-over-year, according to the December ADP^® National Employment Report^TM produced by the ADP Research Institute^® 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.

"We're returning to a labor market that's very much aligned with pre-pandemic hiring," said Nela Richardson, chief economist, ADP. "While wages didn't drive the recent bout of inflation, now that pay growth has retreated, any risk of a wage-price spiral has all but disappeared."

December 2023 Report Highlights*

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

JOBS REPORT

Private employers added 164,000 jobs in December
Job gains rose for the fourth straight month, led by a healthy bump in leisure and hospitality hiring. Construction held strong in the face of high interest rates, but manufacturing continued to struggle, notching another month of losses.

Change in U.S. Private Employment:     164,000

Change by Industry Sector

- Goods-producing:     9,000

• Natural resources/mining     -2,000
• Construction     24,000
• Manufacturing     -13,000

- Service-providing:     155,000

• Trade/transportation/utilities     15,000
• Information     -2,000
• Financial activities     18,000
• Professional/business services     1,000
• Education/health services     42,000
• Leisure/hospitality     59,000
• Other services     22,000

Change by U.S. Regions

- Northeast:     94,000

• New England     28,000
• Middle Atlantic     66,000

- Midwest:     -21,000

• East North Central     -16,000
• West North Central     -5,000

- South:     -7,000

• South Atlantic     -3,000
• East South Central     -6,000
• West South Central     2,000

- West:     109,000

• Mountain     29,000
• Pacific     80,000

Change by Establishment Size

- Small establishments:     74,000

• 1-19 employees     54,000
• 20-49 employees     20,000

- Medium establishments:     53,000

• 50-249 employees     58,000
• 250-499 employees     -5,000

- Large establishments:     40,000

• 500+ employees     40,000

PAY INSIGHTS

Pay growth slowed in December
Pay for job-stayers rose 5.4 percent in December, slowing from 5.6 percent a month earlier and continuing a deceleration that began in September 2022.

Median Change in Annual Pay (ADP matched person sample)

- Job-Stayers     5.4%

- Job-Changers     8.0%

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

- Goods-producing:                                                       

• Natural resources/mining     4.9%
• Construction     6.0%
• Manufacturing     5.1%

- Service-providing:

• Trade/transportation/utilities     5.2%
• Information     4.8%
• Financial activities     5.9%
• Professional/business services     5.2%
• Education/health services     5.9%
• Leisure/hospitality     6.4%
• Other services     5.6%

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

- Small firms:

• 1-19 employees     4.6%
• 20-49 employees     5.6%

- Medium firms:

• 50-249 employees     5.7%
• 250-499 employees     5.5%

- Large firms:

• 500+ employees     5.4%

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 of jobs added was revised from 103,000 to 101,000. The historical data file, and weekly data for the previous month, is 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 2024 ADP National Employment Report will be released at 8:15 a.m. ET on January 31, 2024.

About the ADP® National Employment Report^TM
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 Institute 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 Institute® 
The ADP Research Institute delivers data-driven discoveries about the world of work and derives reliable economic indicators from these insights. We offer these findings as a unique contribution to making the world of work better and more productive by delivering actionable insights to the economy at large.

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, and ADP Research Institute are registered trademarks of ADP, Inc. All other marks are the property of their respective owners.

Copyright © 2024 ADP, Inc. All rights reserved.

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SOURCE ADP, Inc.

FAQ

How many jobs were added in December 2023 according to the ADP National Employment Report?

Private employers added 164,000 jobs in December, with job gains rising for the fourth straight month.

What was the percentage increase in annual pay year-over-year?

Annual pay was up 5.4% year-over-year, reflecting a significant growth in wages.

Which industry sector saw the highest job gains in December 2023?

Leisure and hospitality hiring led the job gains, with a healthy bump in employment in this sector.

How did pay growth change in December 2023 compared to the previous month?

Pay growth for job-stayers slowed to 5.4% in December, down from 5.6% a month earlier, continuing a deceleration since September 2022.

What was the median change in annual pay for job-stayers in the leisure and hospitality sector?

The median change in annual pay for job-stayers in the leisure and hospitality sector was 6.4%, indicating significant growth in wages for employees in this industry.