ADP Reports 235,000 Private-Sector Jobs Created in December, Well Above Estimates

Treasury yields rose along with the U.S. Dollar while equity markets dipped following a much stronger-than-expected jobs report from ADP on Thursday.

The huge jump in jobs comes despite the Federal Reserve’s attempts to slow a red hot jobs market that has helped push inflation to near its highest level in more than 40 years.

Private Payroll Growth Surged

The U.S. labor market closed out 2022 with a robust gain, with companies adding far more jobs than expected in December, according to payroll processing firm ADP.

Private sector 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.

The details show that the goods-producing sector increased by a relatively meager 22,000, but 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.

Additionally, 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.

What Does Mean?

“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.”

Looking Ahead to Friday’s NFP Report

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.