ADP Employment Measure Improves in December
by:Tom Moeller
|in:Economy in Brief
Summary
- Job gain is strongest since August but trend slows.
- Service & construction gains pick up; factory jobs fall.
- Pay increases continue to slow.
The ADP National Employment Report indicated that nonfarm private sector payrolls increased 164,000 during December following a 101,000 November gain, revised from 103,000. A 117,000 December gain had been expected in the Action Economics Forecast Survey. The 2.0% y/y increase for 2023 compares to 3.0% in 2022. Growth slowed further to 1.2% (AR) during the last three months.
Small business hiring (less than 50 employees) increased 74,000 last month after a 4,000 November rise. The 2.2% y/y rise is improved from a January low of 0.2% y/y. Employment at medium-sized firms (50-499,000 employees) rose 53,000 (2.4% y/y) in December after increasing 68,000 in November. The gain remained below a 180,000 June high. Large business hiring (500+ employees) rose 40,000 (0.1% y/y) during December following a 34,000 November rise. The 29,000 average monthly increase in Q4 compares to a 12,000 average decline in Q3 and a 33,000 Q2 average drop.
By industry group, goods-producing employment rose 9,000 after a 13,000 November decline and a 5,000 October easing. Goods sector hiring rose 2.5% in 2023 after a 1.5% increase in 2022. Working higher, the number of jobs in the construction sector rose 24,000 (4.9% y/y), the strongest increase in five months. Offsetting this gain, hiring in the manufacturing sector fell 13,000 in December (-1.6% y/y), the ninth monthly drop in the last ten. Natural resource & mining sector employment weakened 2,000 (+22.3% y/y) after a 5,000 November increase.
Service-producing jobs rose 155,000 last month following a 114,000 November rise. It was the strongest increase in five months but remained well below July’s 269,000 increase. During all of last year, private service sector payrolls rose 1.9% after a 3.3% increase in 2022. Leading last month’s increase, leisure & hospitality job rose 59,000 (8.0% y/y) after falling 9,000 in November. The latest rise remained well below a 225,000 increase in June. Education & health service employment grew 42,000 (1.5% y/y) after a 43,000 November improvement. Financial sector jobs rose 18,000 (-1.2% y/y), the largest of five consecutive monthly increases. Trade, transportation & utilities hiring rose 15,000 (1.5% y/y) after a 56,000 November increase. Professional & business service jobs edged 1,000 higher (-0.5% y/y) following three consecutive months of decline. Also restraining the overall service sector gain, information sector employment fell 2,000 (-1.5% y/y) after rising 3,000 in November.
Growth in median annual pay for "job stayers" eased to 5.4% y/y in December from 5.6% y/y in November, remaining well below a September 2022 high of 7.8% y/y. The earnings slowdown continued to be led by the leisure & hospitality sector, where a 6.4% y/y pay gain in December compared to 16.9% y/y growth in March 2022. Construction sector pay grew a steady 6.0% y/y but that remained below February 2023 high of 7.1% y/y. Education & health services pay rose a lessened 5.9% y/y, down from a 7.3% y/y high in October 2023. Financial sector earnings rose 5.9% y/y, below a 7.8% y/y high in November of 2022, while information sector pay rose a lessened 4.8% y/y and remained below the 8.0% y/y peak in June 2022. Factory sector earnings rose a steady 5.1% y/y versus a high of 7.8% y/y in September 2022. Pay increases for “job changers” decelerated to 8.0% y/y, below the 16.4% y/y peak in June 2022.
By Census region, the number of jobs in the West rose 109,000 (2.1% y/y) after declining 10,000 in November. Jobs in the Northeast rose 94,000 (6.3% y/y) after increasing 59,000 in November. Elsewhere, employment fell last month. The number of jobs in the Midwest declined 21,000 (+2.9% y/y) after a 1,000 November gain. Employment in the South weakened 7,000 last month (-0.9% y/y) after a 57,000 November increase.
The ADP National Employment Report and Pay Insights data can be found in Haver's USECON database. Historical figures date back to January 2010 for private employment. Pay data date back to October 2020. The expectation figure is available in Haver's AS1REPNA database.
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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