By Paycheck company ADP has reported that businesses added a solid 164,000 new jobs in December, surpassing the economists’ forecast of a 130,000 increase. Although the ADP payroll estimate is not an accurate predictor of the government’s official employment report, both surveys generally move in the same direction over time.
The reports indicate a general slowdown in hiring, but companies continue to add workers due to the steady demand for their goods and services. It is anticipated that the government will report the creation of 170,000 new jobs in December, including government workers, in its official report.
The Big Picture
While the labor market has lost some of its luster with a decline in job openings to a nearly three-year low and a slower hiring pace, unemployment rates remain extremely low. Moreover, consumers’ confidence in the economy allows them to continue spending. These factors may be enough to prevent the U.S. from entering a recession despite the Federal Reserve’s implementation of high interest rates to control inflation.
Market Reaction
Prior to the release of the ADP report, both the Dow Jones Industrial Average (DJIA) and the S&P 500 (SPX) were expected to open higher in Thursday trades.
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