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ADP Private Payrolls Report: U.S. private employers returned to hiring in December, signaling a modest improvement in labor market conditions, according to a report released Wednesday by ADP.
Businesses added 41,000 jobs during the month. The increase followed a revised decline of 29,000 positions in November.
Hiring activity improved but remained weaker than economists had anticipated. The latest data marked a reversal after several months of contraction.
Private payrolls had fallen in three of the four months preceding December. The rebound provided a cautious sign of stability as 2025 drew to a close.
Job growth in December fell short of market forecasts. The final figure was lower than the 48,000 increase anticipated by Dow Jones economists.
Hiring gains were driven exclusively by service-based industries. Education and healthcare accounted for the largest increase, adding 39,000 positions.
Leisure and hospitality followed with a rise of 24,000 jobs. Employment also expanded in trade, transportation, and utilities, which gained 11,000 jobs.
Financial services recorded a smaller uptick, with payrolls increasing by 6,000. Employment losses in several areas weighed on overall hiring in December. Professional and business services reported a reduction of 29,000 jobs.
Information services were also contracted, cutting 12,000 positions. The goods-producing sector registered a modest decline.
Payrolls in these industries fell by 3,000, largely reflecting a drop of 5,000 manufacturing jobs. Most hiring came from smaller businesses.
Employers with workforces under 500 generated nearly all of the job gains. Large companies posted minimal growth, adding just 2,000 positions.
Smaller employers drove the year-end improvement in hiring, while large companies continued to slow recruitment, according to ADP Chief Economist Nela Richardson.
Richardson said small businesses bounced back in December after cutting jobs in November. She added that larger employers remained cautious and reduced their hiring pace.
ADP also updated its November figures. The prior estimate showing a loss of 32,000 jobs was revised in the latest release.
Pay growth showed little movement at the end of the year, reflecting continued moderation in wage pressures.
Employees who remained with their current employers posted average annual raises of 4.4%.
That rate was unchanged from November. Workers who moved to new jobs experienced stronger pay increases.
Annual wage growth for job changers reached 6.6%. The figure represented a 0.3 percentage point improvement from the prior month.
The ADP report precedes the highly anticipated nonfarm payrolls data from the U.S. Bureau of Labor Statistics.
BLS data collection had been disrupted by the recent government shutdown. The upcoming release will be the first on-time report since the impasse was resolved.
Economists surveyed by Dow Jones are forecasting the creation of 73,000 jobs in December. This would follow a gain of 64,000 positions in November.
The jobless rate is expected to tick down slightly, with projections pointing to 4.5%.
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