“The job market ended the year strongly. Robust Christmas sales prompted retailers and delivery services to add to their payrolls,” says Mark Zandi, chief economist of Moody’s Analytics, which produces the report with ADP. “The tight labor market got even tighter, raising the specter that it will overheat.”
The question is whether a tighter labor market will lead to stronger wage growth. Although worker pay has increased for nine consecutive quarters, it hasn’t risen enough to beat inflation. In fact, real wages have fallen 6.9 percent since 2006.
Where Jobs Are Growing
“We’ve seen yet another month where the labor market has shown no signs of slowing,” says Ahu Yildirmaz, vice president and co-head of the ADP Research Institute. “Throughout the year there was significant growth in services except for an overall loss of jobs in the shrinking information sector. Looking at company size, small businesses finished out 2017 on a high note adding more than double their monthly average for the past six months.”
The goods-producing sector added a total of 28,000 jobs last month, with gains in mining (+3,000 jobs), construction (+16,000 jobs) and manufacturing (+9,000 jobs).
On the service-providing side, professional/business services added the most jobs last month at 72,000, followed by education/health services at 50,000 and trade/transportation/utilities at 45,000 jobs.
Tomorrow’s report from the Labor Department is expected to show the addition of 190,000 jobs to public and private non-farm payrolls, and an unemployment rate holding steady at 4.1 percent.
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