US Private Hiring Cools, Wage Growth Slows

Private sector employers in the US added 103,000 jobs in November, ADP said Wednesday.

That was below estimates, but still a decent pace of job creation. Consensus expected 130,000 from the headline print. The range of estimates, from 30 economists, was 83,000 to 200,000.

The prior month’s headline was revised lower, to 106,000 from 113,000. The three-month moving average is now right at 100,000.

“Restaurants and hotels were the biggest job creators during the post-pandemic recovery, but that boost is behind us, and the return to trend in leisure and hospitality suggests the economy as a whole will see more moderate hiring and wage growth in 2024,” ADP chief economist Nela Richardson said Wednesday.

Leisure and hospitality actually shed 7,000 jobs in November in ADP’s data. Manufacturing lost 15,000 positions. Hiring was strong in education and health services and in financial activities. Notably, construction dropped 4,000 positions.

By firm size, hiring was concentrated in businesses with 50 or more employees (a 16,000 drop in the 20-49 employee bucket largely offset a decent gain for the country’s smallest businesses).

The soft headline print underscored the message from Tuesday’s JOLTS release. Although the government’s jobs report on Friday will obviously be “the decider” (as W. might put it), the bar for NFP to send an unequivocally strong (i.e., hawkish) message about the labor market is now pretty high.

ADP’s “pay insights” showed wage growth decelerated further last month. The annual pace of pay growth for job stayers was 5.6%, the slowest in 26 months.

Job changers saw pay gains of 8.3%, the smallest YoY gain since June 2021. The reward for quitting (i.e., the spread) was basically unchanged at the lowest levels in the (very short) history of the new ADP series.

Although ADP’s been a poor predictor of NFP in the pandemic era, Wednesday’s data nevertheless offered “another piece of labor market information that points to jobs coming back closer to equilibrium,” BMO’s Ben Jeffery wrote. “Slower hiring and cooler wage growth all continue to represent progress from the Fed’s perspective in returning the economy to more sustainable levels, and inflation closer to 2%.”


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One thought on “US Private Hiring Cools, Wage Growth Slows

  1. Interesting, in yesterday’s JOLT data, openings went down the most in Financial Activities and Education and Health Services. I know the data is noisy, but did those industries just manage to fill open positions?

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