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Employers in the private sector added 164,000 jobs in December, the latest ADP National Employment Report shows, following an increase of 103,000 jobs in November. In addition, annual pay growth continued to ease over the month, dropping to 5.4%.

“We’re returning to a labor market that’s very much aligned with pre-pandemic hiring,” said Nela Richardson, ADP’s chief economist. “While wages didn’t drive the recent bout of inflation, now that pay growth has retreated, any risk of a wage-price spiral has all but disappeared.”

For another month, service-providing industries added the most jobs (+155,000), primarily in leisure/hospitality (+59,000), education/health services (+42,000), and other services (+22,000). Within goods-producing industries, construction gained 24,000 jobs, while manufacturing lost 13,000. 

By region, the West (+109,000) and Northeast (+94,000) had the largest gains, and the Midwest lost 21,000 jobs. Job growth by establishment size ranged from 40,000 (large businesses) to 74,000 (small businesses).