U.S. private sector jobs rise by 122,000 in December

ROSELAND, N.J. - The private sector in the United States saw an increase of 122,000 jobs in December, while annual pay rose by 4.6% from the previous year, as reported by the ADP® National Employment Report™. This independent assessment of the labor market is a collaborative effort between ADP Research and the Stanford Digital Economy Lab, utilizing anonymized payroll data from over 25 million U.S. employees. According to InvestingPro, ADP stands as a prominent player in the Professional Services industry, with a substantial market capitalization of $117.5 billion and consistent revenue growth of 6.6% over the last twelve months.

The report offers a granular view of employment changes within the private sector, and the December figures indicate a deceleration in job growth and pay increases. Manufacturing experienced a decline for the third consecutive month, while health care continued to be a robust sector for job creation in the latter half of the year. For investors seeking deeper insights, InvestingPro analysis indicates that ADP maintains strong financial health with a "GOOD" overall rating, supported by its robust profit metrics and consistent dividend payments for 51 consecutive years.

The employment gains were not uniform across industries. The goods-producing sector added 10,000 jobs, with construction seeing an increase of 27,000 positions, despite losses in natural resources/mining and manufacturing. The service-providing sector contributed 112,000 jobs, led by education/health services and leisure/hospitality.

Geographically, job changes varied, with the West leading in job creation, adding 82,000 positions. The Northeast and South each contributed 19,000 jobs, while the Midwest saw a modest increase of 7,000 jobs.

Regarding establishment size, large businesses (500+ employees) accounted for the bulk of the employment increase, adding 97,000 jobs. Small establishments (1-49 employees) and medium establishments (50-499 employees) saw smaller gains.

In terms of pay, the growth for job-stayers slowed to 4.6%, marking the slowest pace since July 2021. Job-changers experienced a pay growth of 7.1%, a slight decrease from the previous month.

The November job figures remained unchanged at 146,000 added jobs. The next ADP National Employment Report is scheduled for release on February 5, 2025. This report is part of ADP's ongoing commitment to providing deep insights into the U.S. labor market and is based on actual payroll data from client companies served by ADP.

The information presented in this article is based on a press release statement from ADP, Inc. InvestingPro offers comprehensive research reports and additional insights on ADP, including over 13 exclusive ProTips and detailed financial metrics. Notably, while the company shows strong operational performance, current analysis suggests it's trading above its Fair Value, making it essential for investors to conduct thorough due diligence before making investment decisions.

In other recent news, Automatic Data Processing (NASDAQ:ADP) reported a robust first-quarter performance, showcasing a 7% increase in revenue and a 12% rise in earnings per share (EPS), surpassing market expectations. These strong results have been attributed to the successful acquisition of WorkForce Software (ETR:SOWGn) and solid results in the Employer Services and Professional Employer Organization segments. Additionally, ADP has raised its annual dividend rate, marking its 50th consecutive year of dividend growth, a milestone that places the company among the prestigious 'Dividend Kings'.

Analysts from TD Cowen, Stifel, and RBC Capital have maintained their Hold and Sector Perform ratings on ADP shares, while raising their price targets, reflecting the company's consistent performance and robust bookings. ADP has updated its revenue growth projection for fiscal year 2025 to 6-7%, an increase of approximately $200 million, attributed to the WorkForce Software acquisition and strong first-quarter results. However, the expected improvement in EBIT margin has been revised downward from an increase of 60-80 basis points year-over-year to 30-50 basis points, accounting for around $50 million in acquisition-related headwinds.

In terms of executive changes, John C. Ayala, the current Chief Operating Officer, is set to leave his role, and Joseph DeSilva, currently President of Global Sales at ADP, will step into the role of Executive Vice President, North America and Chief of Operations. Lastly, ADP has introduced ADP Lyric, a new global human capital management platform. These are recent developments shaping ADP's business operations and future trajectory.

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