A ‘help wanted’ sign is displayed in a window of a store in Manhattan on December 02, 2022 in New York City.
Spencer Platt | Getty Images
The jobs market closed out 2022 on a high note, with companies adding far more jobs than expected in December, payroll processing firm ADP reported Thursday.
Private payrolls rose by 235,000 for the month, well ahead of the 153,000 Dow Jones estimate and the 127,000 initially reported for November.
related investing news
While the goods-producing sector increased by a relatively meager 22,000, service providers added 213,000, led by leisure and hospitality, which added 123,000 positions. Professional and business services grew by 52,000, while education and health services added 42,000.
Stock market futures edged lower following the report as investors fear that strong jobs numbers could push the Federal Reserve to keep raising interest rates.
The big jobs surprise comes despite the Federal Reserve’s attempts to slow a sizzling jobs market that has helped push inflation to near its highest level in more than 40 years.
The central bank raised interest rates seven times in 2022, totaling 4.25 percentage points, and officials have identified labor market imbalances as a pivotal area they want to target. There are still about 1.7 job openings for every available worker, a condition that has led to a spike in wages that nevertheless has failed to keep pace with cost of living increases.
ADP reported that annual pay across all categories rose 7.3% from a year ago, led by a 10.1% increase in the pivotal leisure and hospitality industry.
“The labor market is strong but fragmented, with hiring varying sharply by industry and establishment size,” ADP chief economist Nela Richardson 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.”
Trade, transportation and utilities saw a job loss of 24,000 on the month, while natural resources and mining declined 14,000 and financial activities dropped by 12,000. Other notable gainers by sector included professional and business services (52,000), education and health services (42,000) and construction (41,000).
Job gains were evenly distributed between small- and medium-sized businesses, which together added 386,000 workers. Companies with more than 500 employees reported a drop of 151,000.
The job gains cap off a year in which payroll growth averaged nearly 300,000 a month, according to the ADP data, which can differ substantially from the Labor Department’s official nonfarm payrolls count.
That growth has come even with an economy that saw negative growth in the first two quarters — a widely accepted definition of a recession — and aggressive tightening from the Fed. At their December meeting, central banker policymakers said they plan to continue raising rates and don’t anticipate any reductions at least through 2023, according to minutes released Wednesday.
The ADP report comes a day before the Labor Department’s count, which is expected to show growth of 200,000 in nonfarm jobs and an unemployment rate holding steady at 3.7%. Nonfarm payrolls rose by 263,000 in November, which was far greater than the ADP total.
