Private wage growth slowed significantly in January, a possible sign that the U.S. labor market is headed for a slower phase this year, ADP reported on Wednesday. Companies added 107,000 workers in the first month of 2024, down from a new estimate of 158,000 in December and below the Dow Jones estimate of 150,000, based on the ADP report.
Only one sector, information services, reported a decline of nearly 9,000 workers, but employment decreased in almost all sectors. The recreation and hospitality sector reported the largest increase, with the addition of 28,000 workers, while trade, transportation, and utilities added 23,000, and construction increased by 22,000. Service companies are responsible for 77,000 jobs, with goods manufacturers adding the rest.
The announcement comes two days before the Labor Department's NFP jobs report, which is expected to show a growth of 185,000, compared to an increase of 216,000 in December. Although ADP data can be an indicator of private sector hiring, the two reports often differ, with ADP often exceeding the Labor Department's figures.
Regarding wage increases, ADP reported an annual increase of 5.2%, a number that is above the government's measure of average hourly earnings. Medium-sized companies, with between 50 and 499 employees, led job creation, adding 61,000. Small businesses added just 25,000.
