Private payroll processor ADP reported a mix bag for the U.S. job market in December, though wage growth was decidedly sluggish. File photo by Jim Ruymen/UPI | License Photo
Jan. 5 (UPI) -- "Strong but fragmented" is how private payroll processor ADP described the U.S. labor market on Thursday, though the real concern could be the lack of increase in overall wages.
ADP reported that private-sector employment increased by 235,000 last month, though gains were mixed across the various sectors.
"The labor market is strong but fragmented, with hiring varying sharply by industry and establishment size," Nela Richardson, the chief economist at ADP, said. "Business segments that hired aggressively in the first half of 2022 have slowed hiring and in some cases cut jobs in the last month of the year."
The bigger the company, the more it hired.
In the goods-producing sector, it was construction activity that saw the most gains, with 41,000 new hires reported last month. The same could not be said, however, for jobs in mining and natural resources, which saw headcounts decline by 41,000 last month.
In the services sector, leisure and hospitality accounted for nearly half of the new hires reported in December, with 123,000 people added to payrolls. Trade, transportation and utilities -- mirroring the decline in mining and natural resources -- saw new hires decline by 24,000 last month.
Market watchers are keeping a close eye on policy decisions from the U.S. Federal Reserve aimed at lowering consumer-level inflation. Year-on-year inflation is running at around 7%, down from double-digits during summer 2022, but remains well above target.
Fed officials have said that job losses may be an unfortunate consequence of increasing lending rates enough to curb demand and lower inflation. Wages, meanwhile, are not keeping pace with inflation.
While construction outpaced natural resources in the goods-producing sector, those jobs only boasted wage growth of 6.9%, compared to 7.8% for mining.
In the services sector, meanwhile, gains in new hires for leisure and hospitality were complemented by the highest increases in wages, 10.1% month-on-month.
Overall, however, ADP found that wages in December increased by the slowest pace since March 2022.
In its December survey, the U.S. Conference Board found that confidence in the economy remains high over the short and long term, though wage prospects remain something of a concern.
Only 12% of those responding to the Conference Board felt that jobs were hard to get and just 18% expected hiring problems to last. The outlook for wages, however, was poor.