According to Zhitung Finance APP, the growth of private sector employment in the USA slowed down in December, but the labor market still shows enough resilience, which may prompt the Federal Reserve to gradually cut interest rates in 2025. According to the ADP National Employment Report released on Wednesday, private sector employment increased by 0.122 million last month, below the market expectation of 0.14 million, marking the lowest level since August 2024. In comparison, employment increased by 0.146 million in November. In terms of wages, the year-on-year growth rate fell to 4.6%, the lowest level since July 2021.

ADP Chief Economist Neela Richardson pointed out that in the last month of 2024, the growth rate of the labor market slowed down, with both hiring and wage growth decelerating. The ADP report is typically released two days earlier than the non-farm employment data from the U.S. Bureau of Labor Statistics. Economists surveyed by Dow Jones expect a non-farm employment increase of 0.155 million in December, a decrease from November's 0.227 million.

Federal Reserve policymakers are closely monitoring employment data to shape future MMF policy. Although most officials believe the labor market remains robust, they still want to maintain an accommodative interest rate to avoid threatening job creation. Additionally, they express greater confidence in the stabilizing inflation rate, despite it remaining above the Federal Reserve's 2% target. ADP data may further prove that wage growth will not exert additional pressure on inflation.

In terms of Industry, the employment growth varies. The largest increases were seen in Education and Medical Services, Construction, and Leisure and Hospitality. Specifically, the Education and Health Services sector added 0.057 million jobs, the Construction sector added 0.027 million jobs, Leisure and Hospitality added 0.022 million jobs, and the Financial Activities sector added 0.012 million jobs.

On the other hand, the manufacturing sector decreased by 0.011 million jobs, while Natural Resources and Mining lost 6,000 jobs, and Professional and Business Services saw a reduction of 5,000 jobs.

Almost all employment growth came from large companies with more than 500 employees, which collectively added 0.097 million jobs. The data released on Wednesday suggests that the trend of the U.S. labor market gradually softening in 2024 may continue into year-end. Federal Reserve officials need to find a balance between this trend and renewed inflation concerns to decide the magnitude of continued interest rate cuts in 2025 and beyond.

In addition, a report jointly released by ADP and the Stanford Digital Economy Lab shows that wage growth is further cooling. Workers who changed jobs saw their wages increase by 7.1%, while those who stayed in their original positions had a wage increase of 4.6%, the lowest level since mid-2021. ADP's survey results are based on the payroll of over 25 million private sector employees in the USA.

Another report released on Tuesday revealed that job vacancies in the USA unexpectedly increased in November, while hiring numbers weakened, indicating that the overall labor market is cooling at a fairly slow rate. It is expected that non-farm jobs will increase by 154,000 in December, down from an increase of 227,000 in November. The unemployment rate is expected to remain at 4.2%.

In recent months, labor market data has been unstable due to the impacts of strikes and hurricanes. Nevertheless, given that investors have largely not factored in the possibility of two rate cuts by the Federal Reserve this year, the relevant data may align with a gradually slowing but still robust labor market.