US Private Sector Job Growth Slowed in Final Month of 2024

A hiring sign at a restaurant in Columbia, Md., on June 15, 2024. Madalina Vasiliu/The Epoch Times

Private-sector hiring growth slowed in December 2024 as the U.S. labor market continued moderating.

According to payroll processor ADP’s National Employment Report, December payrolls increased by 122,000, down from the 146,000 increase in November. This represented the smallest increase in four months.

Last month’s reading fell short of the consensus estimate of 140,000.

The majority of private-sector job creation occurred in education and health care services (57,000), leisure and hospitality (22,000), and financial activities (12,000).

For the third month in a row, manufacturing employment decreased, shedding 11,000 jobs. Meanwhile, natural resources and mining experienced a decline of 6,000 jobs, and professional and business services lost 5,000 jobs.

Nearly all new jobs were from large companies with more than 500 employees (97,000).

Wage growth continued to slow in the final month of 2024. Annual pay growth for job stayers eased to 4.6 percent, the lowest annual growth since July 2021. Earnings growth for job changers remained unchanged at 7.1 percent.

This could further support the Federal Reserve’s view that wage growth is not fueling recent inflationary pressures.

“The labor market downshifted to a more modest pace of growth in the final month of 2024, with a slowdown in both hiring and pay gains,” Nela Richardson, chief economist at ADP, said in a statement. “Health care stood out in the second half of the year, creating more jobs than any other sector.”

The ADP data were published before the Bureau of Labor Statistics’ December jobs report, which will be released on Jan. 10.

While market watchers examine the independent monthly private sector employment snapshot, these two reports are unconnected.

Over the past year, ADP has slightly overstated private payroll growth compared to the federal government.

In the first 11 months of 2024, the ADP reported 1.7 million private sector jobs. By comparison, the BLS reported 1.572 million private sector jobs.

Assessing the US Labor Market

The payroll processor’s recent data may accurately reflect what the BLS will report later this week.

Economists anticipate the December jobs report highlighting continued cooling in the U.S. labor market. It is projected that the economy will have created 154,000 new jobs and that the unemployment rate will hold steady at 4.2 percent.

Mark Hamrick, Bankrate’s senior economic analyst, said he thinks that one indicator to confirm further cooling is how long it takes out-of-work individuals to find jobs.

“As one indication of the job market’s longer-term cooling, some unemployed persons are taking longer to find work,” Hamrick said in a statement sent to The Epoch Times. “In November, the number unemployed for six months or longer stood at 1.7 million, up 40 percent from a year earlier.”

While the number of job seekers has slipped—the Federal Reserve Bank of New York’s November 2024 Labor Market Survey showed that the proportion of individuals searching for employment slowed after hitting a series high in July 2024—many workers have become concerned about the labor market’s health.

According to the Federal Reserve Bank of New York’s Survey of Consumer Expectations, the average likelihood of securing a job within the first three months following a job loss has been decreasing since October 2023. The rate is now 54.1 percent, down from 56 percent last month.

In addition, a new Express Employment Professionals-Harris Poll survey found that one-third of job seekers believe there are fewer job opportunities now than there were a year ago. Thirty-eight percent say the number of employment options is the same, and 29 percent have observed an increase.

Perceptions were mixed, with 51 percent of job seekers optimistic that they can find a job in the next six months and 49 percent expecting difficulties.

“Navigating the job market in 2025 requires resilience and adaptability,” Bill Stoller, CEO of Express Employment Professionals, said in a statement. “As job seekers face a dynamic landscape, those who remain proactive and open to continuous learning will find opportunities even in uncertain times. The key to success lies in leveraging one’s unique strengths and staying prepared to pivot as the market evolves.”

The Conference Board’s December 2024 Consumer Confidence Index highlighted that consumers were less optimistic about future business conditions and incomes and more pessimistic about future employment prospects.

The consternation may be justified as small-business owners have signaled that their hiring plans are suspended for the foreseeable future.

According to Red Balloon’s November 2024 Freedom Economy Index, 77 percent of small businesses will neither hire nor reduce staff over the next six months, up from 54 percent a year ago.

“Small businesses remain in a wait-and-see approach to staffing up to expand,” the report stated. “This has been reflected in the continued downward revising of jobs report numbers by the Bureau of Labor Statistics.”

Despite growing concerns, the labor market remains intact as fewer people lose their jobs and more companies hang hiring signs.

For the week ending Jan. 4, the number of Americans filing for unemployment benefits fell by 10,000, to an 11-month low of 201,000, below the market estimate of 218,000.

The four-week average, which removes week-to-week volatility, also tumbled by about 10,000, to 213,000.

The Labor Department’s Job Openings and Labor Turnover Summary report revealed that the number of job openings jumped to 8.1 million, the highest level in seven months.