Private payrolls rose to 235,000 in December, far exceeding estimates from Wall Street Journal economists, who expected a rise of 153,000 jobs.

According to ADP, service providers created 213,000 more jobs, with its leisure and hospitality sector adding 123,000. The professional and business sector grew by 52,000 and education and health services added 42,000 positions.

"The labor market is strong but fragmented, with hiring varying sharply by industry and establishment size," ADP's chief economist Nela Richardson said in the report. "Business segments that hired aggressively in the first half of 2022 have slowed hiring and, in some cases, cut jobs in the last month of the year."

The December figures are a jump month-to-month as employment in the nonfarm private sector rose to 182,000 in November.

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The unexpected job growth comes as the Federal Reserve attempts to slow the job market to minimize rising inflation. There are currently an average of 1.7 job openings for every available worker, Reuters noted.

For the Fed to mitigate high inflation, labor supply and demand have to balance with wage growth in order for cost-of-living to decrease. Chairman Jerome Powell said in a November speech that the economy only needs to add around 100,000 new jobs a month for workers to effectively enter the labor force.

"Job openings have fallen by about 1.5 million this year but remain higher than at any time before the pandemic," said Powell.

Trade, transportation, and utilities saw a job loss of 24,000 on the month, while natural resources and mining declined by 14,000 and financial activities dropped by 12,000.

In addition, the ADP report said pay increases dropped to the lowest level since March 2022, even though payrolls increased in December.

Wages rose only 7.3% in December, below the 7.6% recorded in November. The Fed closely monitors wage increases which could increase inflation if businesses try to reduce the overall cost of labor.