The job market in the United States is experiencing a notable slowdown as 2024 comes to a close, according to the latest report from ADPDespite this deceleration, the resilience of the labor market remains evident, potentially influencing the Federal Reserve's future rate-cutting decisions into 2025. The ADP national employment report, published on a recent Wednesday, showed that private-sector employment increased by only 122,000 jobs in December, which was below the anticipated 140,000 and marked the lowest level since August 2024. In November, the increase was significantly higher at 146,000 positions.

Neela Richardson, the chief economist at ADP, commented on the slowdown in labor market growth during the final month of 2024, indicating that both hiring and wage growth have shown signs of weakeningThe ADP report, which typically precedes the non-farm payroll data released by the Bureau of Labor Statistics by two days, serves as a crucial indicator for economists and policymakers alike

In a recent survey of economists by Dow Jones, the projected increase for non-farm employment in December was set at 155,000, down from November's impressive figure of 227,000.

The Federal Reserve is keeping a close eye on these employment figures to steer their monetary policy in the coming monthsWhile most officials are confident that the labor market remains robust, they hold a cautious stance towards rate cuts to prevent any adverse impact on job creationThey also express increased confidence in the stabilizing inflation rates, despite them still hovering above the Fed's target of 2%. The ADP data may provide additional evidence that wage growth is unlikely to impose extra inflationary pressures.

Employment growth across various sectors presents a mixed pictureThe strongest gains were observed in education and health services, construction, and leisure and hospitalitySpecifically, the education and health services sector added 57,000 jobs, construction saw an increase of 27,000 positions, and leisure and hospitality benefited from an additional 22,000 jobs

• ADP Employment Growth in December
• AI Glasses Take Center Stage at CES
• A50 Dive, US Stocks Open High but Decline
• Financial Firms Eye Year-End Bonuses
• Intel Drives into Automotive Ecosystem

The finance sector followed suit with a gain of 12,000 jobs.

Contrastingly, the manufacturing industry witnessed a decrease of 11,000 jobs, while the natural resources and mining sector lost 6,000 positions, and professional and business services saw a decline of 5,000 jobsAlmost all job growth originated from large companies, those employing over 500 workers contributed 97,000 jobsThis information underscores a broader trend indicating that the U.Slabor market might continue to exhibit signs of softening as 2024 nears its end, leaving the Federal Reserve with the challenge of balancing this trend against renewed inflation concerns as they contemplate future rate cuts beyond 2025.

Moreover, a collaborative report from ADP and the Stanford Digital Economy Laboratory highlights a further cooling in wage growthFor workers who switched jobs, their wages rose by 7.1%, while those who remained in their positions experienced an increase of 4.6%, the lowest rate since mid-2021. This survey is based on payroll data from over 25 million private-sector employees across the United States.

In another revealing report released on the same day, the labor market situation in November showed a paradoxical mix of trends

Notably, job vacancies unexpectedly climbed, indicating a lingering demand for labor, while recruiting activity itself displayed a decline, as if companies had pressed a "slow down" button on expansion plansThis suggests an overall cooling of the labor market, akin to a vessel gradually coming to shore at a slow paceLooking ahead to December, forecasts have become more precise, predicting an increase of 154,000 non-farm jobs compared to November's 227,000, while unemployment is expected to hold steady at 4.2%.

Recent months have positioned the U.Slabor market at the center of a storm filled with turmoilThe landscape was first shaken by a wave of strikes across multiple industries, with workers rallying in the streets to voice their demands, leading to significant production stoppages and unfilled job vacanciesSubsequently, hurricane damage ravaged coastal businesses, crippling factory facilities and hampering employee commutes, further disturbing the normal operations of the labor market