© Reuters
By Geoffrey Smith
Investing.com — The U.S. labor market remained as resilient as ever around the year-end, despite increasing evidence of layoffs at individual companies.
Private-sector grew by 235,000 in the month through mid-December, according to ADP’s monthly survey published Thursday, almost twice November’s level of 127,000. Meanwhile, initial benefits fell to their lowest since late September last week, at only 204,000 – clearly below the 225,000 expected.
The figures underline how demand for labor in the U.S. is still running well ahead of supply, even though various sectors from homebuilding to retail and technology are struggling with the deflation of a stimulus-fueled boom during the pandemic.
“The labor market is strong but fragmented, with hiring varying sharply by industry and establishment size,” said ADP chief economist Nela Richardson in a statement. “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.”
Job growth was largely driven by small and consumer-facing businesses in the month, ADP said, with leisure and hospitality accounting for over half of the net job gains at 123,000. Professional and business services gained 52,000 jobs and health and education services 42,000, while there were declines in manufacturing, natural resources and mining, and trade and transportation.
The numbers suggested that the tens of thousands of people laid off by big-name employers such as Meta Platforms (NASDAQ:) and Target (NYSE:) in recent months are quickly being absorbed by smaller companies hungry to fill their own vacancies. While large-scale companies shed a net 151,000 jobs last month, small businesses (with fewer than 50 staff) added 159,000 jobs while medium-sized businesses (with fewer than 250 staff) added 32,000.
While the sustained strong trend in hiring is losing its surprise factor, there was also evidence of economic resilience elsewhere on Thursday, as the U.S. trade deficit narrowed sharply in December to $61.5 billion, the smallest deficit in over two years.
Ryan Sweet, chief U.S. economist with Oxford Economics, said the numbers mean that net trade will likely add as much as 0.15% to gross domestic product in the fourth quarter. While Sweet said he expects the economy to slow in the course of 2023 due to the Federal Reserve’s interest rate hikes over the last year, the economy’s strong momentum at the end of 2022 may mean that the recession arrives later than expected.
