Private sector employers added 41,000 jobs last month, payroll giant ADP reported Wednesday, while annual pay grew 4.4% year over year.
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However, there was a steep drop of 29,000 jobs in December in the professional and business services sector, which includes accounting, tax preparation and other types of services. Overall, the service-providing sector added 44,000 jobs, led by education and health services, which together added 39,000 jobs, and the leisure and hospitality sector, which gained 24,000 jobs.
The goods-producing sector lost 3,000 jobs, including the manufacturing industry, which shed 5,000 jobs, partially offset by the construction industry, which gained 1,000 jobs, and the natural resources and mining sector, which also added 1,000 jobs.
Small business hiring rebounded from last month’s dire report, adding 9,000 jobs, including 4,000 in businesses with between one and 19 employees, and 5,000 in businesses with between 20 and 49 employees. Medium-size establishments added 34,000 jobs, including 29,000 in businesses with between 50 and 249 employees, and 5,000 in companies with between 250 and 499 employees. Large establishments with 500 employees or more gained 2,000 jobs.
Year-over-year pay growth for people who stayed in their jobs rose 4.4% in December, the same rate as November. For those who changed jobs, the pace of pay growth accelerated to 6.6% from 6.3%. In professional and business services, the rate of pay growth for job stayers was 4.1%.
Accounting Today asked ADP chief economist Nela Richardson about the steep job losses in the professional and business services sector, and how much of it occurred in the accounting area.
“We’ve seen two straight months of losses in the sector,” she said during a conference call with reporters. “It is concerning, but we don’t break it out into accounting services, and that particular industry we know has been dealing with labor market shortages. There’s been a struggle to hire, especially young accountants. But what we’ve seen is that professional and business services are tied to these overall macro and micro trends. First of all, it’s consumer demand and B2B business demand and where it’s going. But also there has been a sense that the sector could have overhired in ’23 and ’24 and employees have been resistant to switching jobs.”
She noted that the quit rate shown in the Bureau of Labor Statistics’ monthly Job Openings and Labor Turnover Survey has been lower and lower in recent months. “If you combine these things — the fact that there is some macro uncertainty, especially tied to incoming demand, as well as the fact that internally workers are staying put and firms may have overhired (and this is actually a characteristic I would apply to the information sector as well) — you can see that might lead to a slowdown for employers in terms of new hires,” said Richardson.
She later noted that there are still some “green shoots” in the finance and accounting areas as they are still experiencing labor shortages. She attended an accounting conference last year and heard from attendees about those shortages, which are being only partially alleviated by the use of artificial intelligence. “They can’t wait to get AI productivity into their discipline to accelerate and advance and maybe even create new jobs because of this technology,” she said. “It’s really going to be a lopsided impact, and that’s why we’re really focused on being as granular as possible with our data to capture that.”
