December Private Sector Payrolls Drop to Lowest Level Since August

In pre-market trading, futures have seen some ups and downs as new labor market information is released ahead of the stock market opening. Initially, futures were slightly negative, then turned positive on the economic data, but have returned to negative levels with the Dow down by 15 points, the S&P 500 down by 5 points, and the Nasdaq down by 25 points. Additionally, ten-year bond yields have risen over 4.7%, marking the highest difference observed in years between these and two-year yields.

ADP Private-Sector Payrolls Fall Short

The morning's job report, provided by Automatic Data Processing (ADP), indicates that there were 122,000 new private-sector jobs created in December. This number is below the expected 136,000 and less than the previous month's revised figure of 146,000. December's figure is also noted to be the lowest for private-sector job creation since August of the previous year.

As anticipated, job growth was more robust in the Services sector, which added 112,000 jobs compared to just 10,000 in Goods-producing industries. Large corporations, employing over 500 workers, accounted for the majority of the new positions with 97,000 jobs added, while medium-sized firms (those with 50 to 499 employees) contributed an additional 9,000, and small businesses added 5,000 jobs.

On an industry basis, the Education and Healthcare sectors were the largest contributors, adding 57,000 jobs, followed by Construction with 27,000, and Leisure and Hospitality with 22,000 new jobs. There has been a noticeable shift from hospitality jobs driving growth during the Great Reopening after the COVID-19 pandemic to a more stable job market landscape today. In contrast, Manufacturing continued to struggle, recording a loss of 11,000 jobs.

One specific measure in the ADP report, known as Job Stayers versus Job Changers, highlights that wage growth for Stayers is at 4.6% while it stands at 7.1% for Changers. This suggests that the labor market is cooling off overall.

Jobless Claims Released Ahead of Schedule

Due to the market closure tomorrow in honor of former President Jimmy Carter, the usual Weekly Jobless Claims report has been released a day early. Initial Jobless Claims showed a number of 201,000, which is below the anticipated 215,000 and down from last week's revised figure of 211,000. This is the lowest weekly count of new jobless claims since mid-February of the previous year, though some of this decrease may be linked to seasonal adjustments at year-end, indicating possible future revisions.

Continuing Claims increased to 1.867 million from 1.834 million the previous week. While this figure remains below the troubling 1.9 million mark reached earlier this fall, it appears that employers are hesitant to increase the workforce's weekly claims at this time.

Anticipations for Today’s Stock Market Movement

Current news focuses on wildfires that have erupted near Los Angeles, which is expected to have repercussions for both local populations and the economy. This afternoon, the minutes from the latest Federal Open Market Committee (FOMC) meeting will be released, where a reduction of 25 basis points was made to the Fed's funds rate, adjusting it down to a range of 4.25% to 4.50%, a drop of 100 basis points compared to a year ago. There is a sense of anticipation around these minutes as they might reveal further information that could influence market conditions.

payrolls, ADP, jobs