The labor market is sending signals of "neither hot nor cold."

In December, ADP private sector added 41,000 jobs, a significant rebound from the decline of 29,000 in November, but still below market expectations of around 50,000. Why is this result called "just right"? Because it hits both ends: the strength is enough to scare off inflation concerns and make people afraid of rate cuts, while the weakness hasn't pushed the economy into a recession story.

Looking at industry distribution, the growth mainly comes from the service sector. Education, healthcare, hotels, and leisure—these livelihood-related sectors—supported the economy at year-end, but professional business services declined noticeably, information technology is laying off, manufacturing remains sluggish, and construction has only marginally improved. In other words, not the entire labor market is heating up, but rather it’s struggling to maintain during the transition of economic momentum.

Wage performance is even more interesting. The annual wage increase for employed workers remains at 4.4%, while those switching jobs can get up to 6.6%. What does this indicate? Frontline workers still have room to negotiate wages, but the wage spiral that the Fed fears most hasn't restarted; companies are more inclined to precisely fill positions rather than blindly expand their workforce.

For the Federal Reserve, this report is more like a "maintain the status quo" chip rather than pressure to change course. The official rate path expects rate cuts only by 2026—this set of employment data actually reinforces that outlook.