"Small Non-Farm" employment numbers fell short of expectations, indicating a continued trend of labor market weakness

The hiring pace in the U.S. private sector slowed in December, suggesting a persistent decline in demand for workers. Data released on Wednesday showed that after an increase of 146,000 in November, December's ADP employment numbers rose by 122,000, the smallest increase in four months and below market expectations. Employment growth varied widely across industries. The largest increases were seen in education and healthcare, construction, and leisure and hospitality. Conversely, employment numbers decreased in manufacturing, natural resources and mining, and professional and business services. The data indicate that the trend of gradual softening in the U.S. labor market will persist into the end of this year. Federal Reserve officials must balance this trend with renewed inflation concerns when deciding on the extent of interest rate cuts in 2025 and beyond. Wage growth further cooled, with job switchers experiencing a wage increase of 7.1%, while non-switchers saw a 4.6% wage increase, the slowest growth rate since mid-2021.