ZINGER KEY POINTS
- Layoffs stabilizing, hiring consistent in late 2023; high labor costs persist.
- 2024 outlook: Slower hiring, continued job cuts expected, albeit at reduced rate.
The pace of monthly employment growth in the private sector of the United States showed a marked improvement in December, indicating the strong resilience of the U.S. labor market.
According to Automatic Data Processing Inc., private employers added 164,000 new payrolls in December, surpassing the November figure of 101,000 and exceeding the expected 115,000.
Construction saw an increase of 24,000 jobs, and financial activities added 18,000 jobs. Conversely, job losses were observed in manufacturing (-13,000), information services (-2,000), and natural resources and mining (-2,000). Simultaneously, pay growth remained sluggish, with existing employees experiencing a 5.4% pay raise, while those switching jobs enjoyed an 8% increase in earnings.
“We’re returning to a labor market that’s very much aligned with pre-pandemic hiring. While wages didn’t drive the recent bout of inflation, now that pay growth has retreated, any risk of a wage-price spiral has all but disappeared,” Nela Richardson, chief economist at ADP, added.
The release of the ADP National Employment Report precedes the highly anticipated data on non-farm payrolls, along with the unemployment rate and wage growth, scheduled to be released by the Bureau of Labor Statistics this Friday. Economist predict non-farm payrolls to come in at 170,000 in December, down from November’s 199,000.
Job Cuts Slow
In other news, Challenger, Gray & Christmas, Inc. reported a decrease in job cuts for December 2023, with U.S.-based employers cutting 34,817 jobs. This was a decline from the 45,510 job cuts reported in November and marked the lowest figure in five months, as well as the second-lowest of the year. Throughout 2023, companies had planned a total of 721,677 job cuts, representing a 98% increase from the 363,824 cuts announced in 2022.
Andy Challenger, senior vice president of Challenger, Gray & Christmas, Inc., commented, “Layoffs have started to stabilize, and hiring has remained consistent as we close out 2023. However, labor costs remain high. Employers are still exercising caution and cost-cutting measures as we enter 2024, so the hiring process may slow for many job seekers, and job cuts will likely continue in Q1, albeit at a slower pace.”
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Originally Posted January 4, 2024 – Private Employment Shows Robust Growth In December: What It Means For Friday’s Key Jobs Report
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