The U.S. economy added 250,000 private, non-farm jobs in December, according to the monthly employment report released by payroll-management firm ADP and its partner Moody's Analytics on Jan. 4. The seasonally adjusted result is 35.1 percent higher than November's downwardly revised addition of 185,000 jobs, and marks a 24.4 percent increase over the previous December, when 201,000 jobs were created.
“The job market ended the year strongly," said Mark Zandi, chief economist of Moody's Analytics in a press release. "Robust Christmas sales prompted retailers and delivery services to add to their payrolls. The tight labor market will get even tighter, raising the specter that it will overheat.”
December's addition of 250,000 jobs is the largest gain seen since March and exceeds the underlying pace of job growth, which Zandi estimates averages somewhere between 175,000 to 200,0000 a month—more than double the amount necessary to accommodate new workers entering the labor force. Last month, Zandi also expressed concern that prospects of an overheated labor market would be greater if the proposed tax legislation—which was signed into law by President Trump on Dec. 22—made its way through Congress, and became law.
Small businesses—those with between one and 49 employees—gained 94,000 jobs in December. Within that figure, firms that employ fewer than 20 people gained 43,000 jobs, and firms that have 20 to 49 employees added 51,000 jobs. Mid-sized businesses—those with 50 to 499 employees—accounted for the largest share of employment gains by company size for the second consecutive month, with 100,000 positions added in December. Large businesses consisting of 500 employees or more added 56,000 jobs last month. Within that figure, businesses employing 500 to 999 people gained 25,000 jobs, and companies with 1,000 or more employees added 31,000 jobs.
"Looking at company size, small businesses finished out 2017 on a high note adding more than double their monthly average for the past six months,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute in a press release.
By sector, the service-providing sector—which has anchored the ADP's job report for 10 consecutive months—contributed 88.8 percent (222,000) of December's total job gains. The service-providing sector includes jobs in trade/transportation/utilities; information; financial activities, professional and business services; education and health; leisure and hospitality; and other services. Six of the seven subsectors experienced growth in November, with only the information subsector reporting a decrease of 4,000 jobs. This is the fourth consecutive month that the information subsector has lost jobs.
The professional and business services subsector—which includes architecture and engineering firms—has been on an upward trajectory since March. Employment in the subsector continued to grow last month, with the addition of 72,000 jobs, accounting for 30.8 percent of all service-providing sector jobs added in December.
“We’ve seen yet another month where the labor market has shown no signs of slowing,” said Yildirmaz. “Throughout the year there was significant growth in services, except for an overall loss of jobs in the shrinking information sector."
The goods-producing sector, which includes jobs in natural resources and mining, construction, and manufacturing subsectors, added 28,000 jobs in December. Employment in the sector has continued to improve since June, when the sector reported net-zero job growth due to significant losses in construction employment. Employment in the construction subsector increased by 16,000 in December, accounting for 57.1 percent of all goods-producing sector jobs added last month. Employment in the manufacturing and natural resources/mining subsectors was modest, with the addition of 9,000 and 3,000 employees during December, respectively.
ADP's national employment report is often used as a precursor for the monthly Bureau of Labor Statistics (BLS) jobs report, which released its December edition on Jan. 6. ADP's reported addition of 250,000 jobs in December is much higher than the 148,000 jobs reported in the BLS Employment Situation report, which has been skewed by inclement weather and traveling related to the holiday season in the past. It's likely that the December numbers reported by the BLS will be revised slightly upward in the January employment situation release next month.
For more information, read the full employment report from ADP.
