ADP Jobs Report December 2022:

Payroll processor ADP reported Thursday that the job market closed 2022 on the upswing, as companies added much more positions than expected in December.

Private payrolls rose 235K for the month, well ahead of the Dow Jones estimates of 153K and 127K initially reported for November.

While the goods production sector grew by a relatively small percentage of 22 thousand, service providers added 213 thousand, led by the entertainment and hospitality sector, which added 123 thousand positions. Professional and business services grew by 52,000, while education and health services added 42,000.

Stock market futures fell After the report, investors feared that the strong jobs numbers could prompt the Federal Reserve to continue raising interest rates.

The big functionality surprise comes though Fed attempts to slow a crowded job market that has helped push inflation to nearly its highest level in more than 40 years.

central bank raise interest rates Seven times in 2022, for a total of 4.25 percentage points. Officials have identified labor market imbalances as a focal area they want to target. There is still about 1.7 job opportunities for each available workera condition that has led to a rise in wages that has nonetheless failed to keep pace with increases in the cost of living.

ADP reported that annual wages across all categories rose 7.3% from a year ago, led by a 10.1% increase in the pivotal leisure and hospitality industry.

“The labor market is strong but fragmented, with employment varying sharply by industry and size of organization,” said Nella Richardson, chief economist at ADP. “Business sectors that hired strongly in the first half of 2022 slowed hiring and in some cases cut jobs in the last month of the year.”

Trade, transportation, and utilities saw a job loss of 24K during the month, while natural resources and mining declined by 14K, and financial activities decreased by 12K. Other notable gainers by sector included professional and business services (52,000), education and health services (42,000) and construction (41,000).

Job gains were evenly distributed among small and medium-sized firms, which together added 386,000 workers. Companies with more than 500 employees reported a decrease of 151,000.

The maximum job gains in a year with payroll growth were nearly 300,000 per month, according to ADP data, which can differ widely from the Labor Department’s official nonfarm payroll count.

That growth has come even as the economy experienced negative growth in the first two quarters – a widely accepted definition of a recession – and aggressive tightening from the Federal Reserve. At their December meeting, central bank policymakers said they plan to keep raising interest rates and do not expect any cuts until at least 2023, according to the minutes Released Wed.

The ADP report comes a day ahead of the Labor Department’s count, which is expected to show growth of 200,000 non-farm payrolls and a flat unemployment rate of 3.7%. non-agricultural Payrolls increased by 263,000 in Novemberwhich was significantly greater than the total ADP.