Private Sector Job Growth Disappoints in December While Public vs Private Hiring Divergence Widens

The gap between public and private sector employment strategies became more apparent this month, as private sector hiring failed to meet expectations in December. According to ADP’s latest employment report, private employers added 41,000 workers—missing the consensus forecast of 47,000 positions. This represented a modest rebound from November’s steeper loss of 29,000 jobs (revised from 32,000 originally reported).

Divergent Hiring Patterns Across Company Sizes

The employment landscape revealed interesting contrasts in how different-sized businesses approached year-end hiring. While large establishments added just 2,000 positions—suggesting caution among major corporations—smaller and mid-sized companies showed more confidence. Medium-sized firms led the charge with 34,000 new hires, and small establishments contributed 9,000 jobs, demonstrating that private sector resilience came primarily from smaller players rather than corporate giants.

“The data illustrates how large employers and small businesses are operating in different realities,” reflected the perspective from ADP’s chief economist Dr. Nela Richardson. “Smaller firms capitalized on year-end consumer demand, while larger enterprises maintained a more conservative stance.”

Where Growth Actually Happened

The sectors driving private sector employment gains proved predictable: education and health services alongside leisure and hospitality sectors spearheaded December’s job creation. This mirrors broader trends of where private sector investment is concentrating.

The Wage Story: Different Trajectories

Wage dynamics painted a more nuanced picture when comparing public vs private sector compensation trends. Workers who stayed in their current positions saw pay climb 4.4 percent year-over-year—flat with November’s pace. However, job-changers—those switching employers in the private sector—enjoyed faster gains, with annual wage growth accelerating to 6.6 percent from 6.3 percent in the prior month. This suggests the private sector remains competitive for talent mobility.

What’s Coming Next

The Labor Department’s official monthly employment report, due Friday, will expand the lens beyond private sector data to include public sector employment figures. Economists anticipate the broader measure will show 60,000 total jobs added in December (up from 64,000 in November), with the unemployment rate expected to dip to 4.5 percent from 4.6 percent. That report will provide the most comprehensive picture of public vs private sector health.