U.S. private-sector employment achieves a turnaround... but reasons not to smile

U.S. private-sector employment turned to growth in December last year. However, it was below market expectations.

On the 7th, private employment research firm ADP reported that U.S. private-sector employment increased by 41,000 in December last year compared with the previous month. This recovered from a 29,000 decline in November. But it fell short of Dow Jones' market forecast (48,000) and Bloomberg economists' average estimate (50,000).

ADP said that despite the employment market weakness in recent months, there was some recovery at year-end. Private employment had recorded declines in three of the four recent months prior to this release.

By industry, the service sector led the employment recovery. In particular, education and health services added 39,000 jobs, and leisure and hospitality added 24,000. Retail, transportation, and utilities added 11,000, and financial services added 6,000.

By contrast, professional and business services fell by 29,000, and information services declined by 12,000. The goods-producing sector declined by 3,000 overall, with manufacturing down 5,000, contributing to the overall job reduction.

By firm size, most of the employment gains came from small and medium-sized firms with fewer than 500 employees, while net employment gains at large firms amounted to only 2,000.

Nela Richardson, ADP's chief economist, said, "While large firms cut hiring, small firms overcame November's employment declines and increased hiring again at year-end."

ADP revised its previously reported November private-sector employment decline from 32,000 to 29,000.

Wage growth remained generally moderate. The annual wage growth rate for workers who stayed at the same job was 4.4%, the same as in November, while the wage growth rate for job changers was 6.6%, up 0.3% percentage points from the previous month.

Reporter Kim Joo-wan kjwan@hankyung.com