MNI BRIEF: US Hiring, Wages Slowing But Employment Stable-ADP

U.S. hiring and wage pressures continued to slow at the start of 2024 but the labor market remains solid, ADP chief economist Nela Richardson told reporters Wednesday after the payrolls software and services provider reported a lower-than-expected 107,000 new private employer payrolls in January. Markets had estimated a gain of 150,000 new private payrolls.

"If we saw private sector employment at 107,000 through 2024, I think there'd be widespread agreement that this economy has softly landed and is relaxing at its destination," Richardson said. "People are not quitting as quickly as they did in 2022. So you see a bit more stability, and I think that contributes to the higher productivity numbers that we've seen."

Pay for job-stayers grew 5.2% in January, down from 5.4% in December after peaking in September 2022. For job-changers, pay rose 7.2%, the smallest annual gain since May 2021. "Any threat of a price-wage spiral has disappeared," she said. At the same time, "persistent labor shortages are likely to be a matter of fact for the U.S. economy because of the aging population. So I think gone are the days where inflation goes back to sleep for the U.S. economy, so in that sense, the Fed always has to be watchful about what could trigger inflation over the long term." (See: MNI INTERVIEW: Fed Overtightened But Will Wait 'Til May-Harvey)