US private sector adds more jobs than expected in December

Employment increased by 235,000 from November, versus expectations for a 150,000 jump. The figures also showed that annual pay was up 7.3% on the year.

Small businesses with fewer than 50 employees added 195,000 jobs, while medium businesses with between 50 and 499 employees added 191,000 jobs. Large businesses with more than 500 employees shed 151,000 jobs.

The services sector created 213,000 jobs, while the goods-producing sector saw a 22,000 increase.

Nela Richardson, chief economist at ADP, said: "The labour market is strong but fragmented, with hiring varying sharply by industry and establishment size.

"Business segments that hired aggressively in the first half of 2022 have slowed hiring and in some cases cut jobs in the last month of the year."

Pantheon Macroeconomics said: "On the face of it, this upside ADP surprise is consistent with the robust Homebase employment data, which were much stronger than we expected during the December payroll survey week. But ADP has published only four previous payroll numbers using its new methodology, so we don’t yet know whether it will prove to be a reliable indicator.

"Three of the previous four ADP readings have undershot the official private jobs number, and the median error has been -95K. This is nothing like enough to prove definitively that the ADP’s number is systematically biased to the downside, but it does make us more comfortable in our forecast of an above-consensus payroll print tomorrow. We are nudging up our estimate to 275K from 250K; the consensus is 200K."