ADP’s Employment Report showed that private payrolls were stronger than forecasted in December, as employers added 164,000 jobs “led by a healthy bump in leisure and hospitality hiring.” Almost all the growth came in service-providing industries, with goods-producing companies only adding 9,000 jobs. Annual pay for job stayers increased by 5.4% while job changers saw an average increase of 8%, though these figures have cooled considerably from recent highs.
What’s the bottom line? Nela Richardson, chief economist for ADP, noted that “we’re returning to a labor market that’s very much aligned with pre-pandemic hiring.” She also explained that “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.”