Private-sector employers add 235,000 jobs in December, Reports By payroll company

Global economy has not really been doing well ever since the beginning of COVID-19 pandemic. The Russia-Ukraine war even made the situation worse. All this unforeseen contingencies can be traced to the reason why there is global inflationary pressure on all economies.

Despite the economy turmoil going on around the world, rate of unemployment seems to be decreasing.

According to an ADP study, private employment increased by 235,000 jobs in the past month, more than analysts had predicted. Job growth was strong across small and medium-sized businesses.

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This can be linked to a concept in economics called Philips curve.

The Phillips curve is an economic theory that inflation and unemployment have a stable and inverse relationship. Developed by William Phillips, it claims that with economic growth comes inflation, which in turn should lead to more jobs and less unemployment.

It simply states the higher the inflation rate the lower the unemployment rate. That is not the case in several other countries. Majorly in Africa, the higher the inflation rate also the higher the unemployment rate.

According to Cnbc.com, Job gains were evenly distributed between small- and medium-sized businesses, which together added 386,000 workers. Companies with more than 500 employees reported a drop of 151,000.

The job gains cap off a year in which payroll growth averaged nearly 300,000 a month, according to the ADP data, which can differ substantially from the Labor Department’s official nonfarm payrolls count.

The labor market has remained resilient even as the US central bank has pushed to quickly raise interest rates in the past year to slow the economy, making borrowing more expensive.

However, according to ADP data, wage growth for workers in December was the lowest since March 2022, which may have relieved some policymakers.