In a recent revelation, the US labor market continues to show signs of deceleration even as layoffs remain notably low. Data from ADP indicates that only 122,000 private payrolls were added in December, a decline from the 144,000 additions seen in November. This dwindling pace of job creation comes as a broader trend reflecting ‘no hire, no fire’ stasis takes shape, with labor market metrics illustrating a cooling trend.
According to the US Department of Labor, initial jobless claims dropped to 201,000 for the week ending January 4, which is not only a reduction from the previous week’s figures but also below the anticipated 215,000. ADP’s chief economist Nela Richardson attributed the labor market’s current stability to low layoffs and reduced quit rates, a sign of growing caution among workers.
The November Job Openings and Labor Turnover Survey (JOLTS) report revealed a slight drop in the hiring rate from 3.4% in October to 3.3% in November, while the quits rate declined to 1.9% from 2.1%. Both indicators now sit well below their pre-pandemic levels.
As the Federal Reserve continues to focus on these dynamics, Chairman Jerome Powell emphasized in December that while the labor market appears looser compared to pre-pandemic times, the cooling process remains ‘gradual and orderly’. The central bank believes further cooling is unnecessary to achieve their inflation target of 2%.
Market analysts, including IndexBox platform data, anticipate that the upcoming December jobs report might further underscore these trends, with expectations of 163,000 new jobs being added, down from November’s 227,000. However, the unemployment rate is expected to remain steady at 4.2%.