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Private employers hire 164,000 new workers in December; pay growth slows

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Leisure and hospitality hiring led the way in December as U.S. private sector employers added 164,000 new hires compared with a revised downward 101,000 in November.

The news was released in an ADP National Employment Report, done in collaboration with the Stanford Digital Economy Lab.

“We’re returning to a labor market that’s very much aligned with pre-pandemic hiring,” said Nela Richardson, ADP’s chief economist, in a statement. “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.”

Inflation, or a general rise in prices, reared its head in part due to supply chain constraints during the coronavirus pandemic, which began in early 2020. In response, the Federal Reserve Bank has raised interest rates – the price to borrow money – 11 times.

This monetary policy has widespread impacts throughout the economy. Examples of that range include more costly car loans and home mortgages.

“Consumer price inflation remained elevated but continued to show notable signs of easing,” according to the minutes of the Federal Open Market Committee on Dec. 12-13.

In the meantime, leisure and hospitality employers added 59,000 new hires last month after shedding 7,000 jobs in November. Education and health services employers hired 42,000 workers in December, down from 45,000 new hires in November.

Manufacturing employers had a rough month, shedding 13,000 jobs in December after adding 3,000 new hires in November. Construction firms rebounded, gaining 24,000 new hires in December after adding 4,000 workers in November.

Pay hikes softened. Annual median (half above and half below) wage growth for job-stayers rose 5.4% in December compared with 5.6% in November, according to ADP. Job-changers realized an 8% annual median wage increase in December versus year-over gains of 8.3% in November.

In December’s ADP report on pay growth and gender, female workers’ earnings outstripped males’ remuneration in all age groups, from 16-24 to 25-34, 35-54 and 55-84, as in November, according to ADP.

In median annual pay levels, workers in Washington, D.C., enjoyed the highest with earnings of $99,000. Virginia followed with median annual pay of $71,200.

Turning to establishment size, firms with 50-249 employees led the way in December with 58,000 new hires, a decline from 71,000 in November. Small companies of 1-19 employees added 54,000 workers in December, more than double the payroll growth of 22,000 new hires in November.

In terms of regional employment changes, employers in the West hired 109,000 new workers in December compared with 10,000 job layoffs in November, according to ADP. Northeast employers welcomed 94,000 new hires in December, up from 59,000 in November.

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