In December, more people got jobs in private companies than expected, which is good news for the job market in the United States. A company called ADP reported this on Thursday, saying that private jobs increased by 164,000. This is much more than the 101,000 jobs added in November. It’s also better than what experts thought, as they estimated only 130,000 jobs would be added.
The area of work that saw the most improvement was leisure and hospitality, which includes hotels and restaurants. In December, this sector added 59,000 jobs. These types of businesses were hit hard at the beginning of the COVID-19 pandemic, but they have been slowly recovering. The people working in this sector also got higher wages, with a yearly increase of 6.4%.
Construction also did well, contributing 24,000 jobs to the total. Other service businesses, like dry cleaning, added 22,000 jobs, and financial activities increased by 18,000.
However, not every area saw growth. Manufacturing lost 13,000 jobs, and information services as well as natural resources and mining both decreased by 2,000 jobs.
People’s earnings didn’t grow as fast as before. Those who stayed in their jobs saw their pay increase by 5.4% per year, while those who changed jobs got an 8% increase, according to ADP.
The chief economist at ADP, Nela Richardson, mentioned that the job market is becoming more like how it was before the pandemic. She also said that even though wages didn’t cause recent inflation, now that pay growth has slowed down, the risk of prices going up because of wages has almost disappeared.
Looking at different factors, smaller companies with fewer than 50 employees created the most new jobs, with 74,000. In terms of location, the West saw an increase of 109,000 jobs, and the Northeast added 94,000.
This information from ADP comes out a day before another report from the Labor Department, which is usually more closely watched. The two reports might show different numbers because they use different methods to collect data. Economists expect the December nonfarm payroll growth to be 170,000, which is slightly less than the November number of 199,000.
The Federal Reserve, which is in charge of the country’s money policies, is paying close attention to these job reports. They want to understand how the job market might affect inflation. The Federal Reserve thinks the job market is getting better after being imbalanced for a few years, according to the minutes released from their meeting in December.
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