The US private sector added fewer jobs than anticipated in December, payroll firm ADP said Wednesday, with hiring and wage increases both cooling.Private sector employment rose by 122,000 jobs last month, said ADP, missing a consensus forecast of 131,000 according to Briefing.com.”The labor market downshifted to a more modest pace of growth in the final month of 2024, with a slowdown in both hiring and pay gains,” said ADP chief economist Nela Richardson.She added that health care added more jobs than other sectors in the second half of the year.The figure for December was also a slowdown from November’s employment gain of 146,000.In particular, hiring in manufacturing contracted for a third consecutive month, the report said.Most job increases were in the service-providing industries, with education and health services adding 57,000 roles.The bulk of job gains were also driven by companies employing 500 people or more.This adds to “evidence that small businesses are under the most financial pressure,” said Samuel Tombs, chief US economist at Pantheon Macroeconomics.Analysts cautioned that ADP’s data is not always an effective gauge of the government employment report due Friday, although it helps them understand the big picture.”Right now, that picture is one of still substantial increases in jobs by a fast-growing economy but a slowing trend in job creation,” said Carl Weinberg, chief economist at High Frequency Economics.”Today’s figures do not upset that trend,” he added.According to ADP, wage gains slowed in December, with those staying in their jobs seeing pay growth ease to 4.6 percent.This was the slowest pace since July 2021.For those who changed jobs, pay growth was 7.1 percent, slightly below November as well.Weinberg added that he expects the US economy to keep creating jobs until next year, stressing that “slower job growth in a slower-growing economy is not a recession.”He also said that the Federal Reserve “should not rush its rate-cutting agenda based on these figures.”

The effect of new tariffs under consideration by US President-elect Donald Trump is unlikely to be “significant or persistent,” a senior Federal Reserve official said Wednesday.Trump has floated several proposals, including a plan for sweeping tariffs on all goods entering the United States — drawing criticism from many economists concerned about possible negative ripple effects. But in a lecture at the Organization for Economic Cooperation and Development (OECD) in Paris, Fed Governor Christopher Waller — who did not refer directly to Trump — suggested he thought some of the concerns about tariffs may be overblown.”If, as I expect, tariffs do not have a significant or persistent effect on inflation, they are unlikely to affect my view of appropriate monetary policy,” said Waller, who is a permanent voting member of the Fed’s interest rate-setting committee.”I don’t think these draconian tariffs that everybody’s talking about are necessarily going to be implemented,” he added in a nod to Trump’s threats to impose across-the-board tariffs.Waller also addressed the Fed’s likely rate cut path, following a flurry of votes that lowered the US central bank’s benchmark lending rate by 100 basis points in a matter of months.At their most recent meeting in December, Fed policymakers penciled in just two rate cuts for 2025, suggesting they expect a slower pace of cuts ahead.US inflation has fallen sharply since it hit a four-decade high in 2022, but recently ticked higher, creeping away from the Fed’s long-term target of two percent.At the same time, economic growth has remained resilient, and the labor market has stayed relatively robust, raising concerns the Fed may have to keep rates higher for longer to tame it.Higher interest rates indirectly affect borrowing costs for consumers and businesses, affecting the cost of everything from mortgages to car loans. Speaking to the OECD on Wednesday, Waller said he believed that “inflation will continue to make progress toward our two percent goal over the medium term and that further reductions will be appropriate.”If the outlook for the economy evolves as expected, Waller said he would support continuing to cut rates this year.”As always, the extent of further easing will depend on what the data tell us about progress toward two percent inflation, but my bottom-line message is that I believe more cuts will be appropriate,” he said.Futures traders currently see a probability of close to 95 percent that the Fed will remain on pause at the next interest rate meeting later this month, according to data from CME Group. They also assign a probability of around 80 percent that the US central bank will make no more than two quarter percentage-point cuts this year.