Private payrolls in December unexpectedly declined for the first time since April, according to a report Wednesday from payroll processing company ADP.
The company, which estimates employment each month prior to the release of the government’s official payroll estimate on the first Friday of each month, said private payrolls fell by 123,000 in December.
Economists had estimated private payrolls would grow by 100,000, according to Econoday, Other newswires had considerably lower consensus estimates—Dow Jones had the forecast at 60,000—but none foresaw a negative print for the month.
If accurate, ADP’s figures indicate that the U.S. economy has slowed considerably as the pandemic has surged, lockdowns returned, and in the aftermath of the 2020 election.
The ADP estimate has had trouble aligning with the official data since the pandemic struck and the economy began gyrating in unusual and unexpected ways. In many months during the summer rebound, ADP’s numbers severely underestimated the number of jobs the economy added.
The ADP report estimates that employment contracted by 23,000 in the manufacturing sector, putting it at odds with the Institute for Supply Management’s report published this week showing manufacturing employment continued to expand in December.
The ADP report said that employment in leisure and hospitality shrunk by 58,000 and trade and transportation services shrank by 50,000.
Employment expanded in construction, education and health, professional and business services, and finance.
Overall, goods providing businesses shrank payrolls by 18,000 and services business by 105,000.
Medium-sized businesses, with payrolls between 50 and 499, expanded employment by 37,000. Small businesses shrank their ranks by 13,000. The biggest contraction occurred in businesses with 500 or more employees, where payrolls fell by 105,000.
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