MNI BRIEF: US Labor Market 'Very Stable' To End 2023 -ADP

The U.S. labor market ended 2023 on a strong note with private sector hiring rebounding in December and pay growth returning to normal levels without boosting inflation, ADP chief economist Nela Richardson said Thursday.

"Wage growth was never the direct driver, but it did keep inflation elevated," she told reporters after the release of the ADP National Employment Report showed private employers adding 164,000 jobs in the last month of 2023, up from around 100,000 in November and October. "Now that we're seeing wage growth move down at a very steady clip, in our view, there's very little risk of a wage price spiral that will push up inflation in 2024." That benefits workers as well as companies, which "don't have to fight both wage inflation and low supply on the labor side, so they can actually grow their firms in 2024."

People who stayed at their jobs saw pay growth decline to 5.4% in December from above 7% at the start of the year, while the median job changer saw an 8% raise compared to 14% at the start of 2023. "That premium for switching jobs has narrowed considerably over the course of 2023. That's reflected again, in the JOLTS report and it's leading to a very stable labor market at the bottom of the year." (See: MNI INTERVIEW: Bullard Says March Is Too Early For Fed To Cut)