The ADP national employment report puts private payrolls up 235,000 in December after an upward revision to 182,000 in November. The increase is above the consensus of up 145,000 in an Econoday survey. While the new methodology for the report is not intended to predict the change in private payrolls in the BLS Employment Situation, the reading points to another month of solid growth in private nonfarm payrolls when the government report for December is released at 8:30 ET on Friday.

Private service providers' payrolls are up sharply at 213,000 in December, mainly reflecting a strong 123,000 gain in leisure and hospitality. There are good increases of 52,000 in professional and business services, 42,000 in education and health services, 31,000 in"other" services. There is some offset in declines of 24,000 in trade, transportation, and utilities, and 12,000 in financial activities. Goods producers' payrolls are up 22,000 in December entirely due to a 41,000 rise in construction. Manufacturing is down 5,000 and natural resources and mining down 14,000. The gain in construction is something of a surprise given the drop in single-family home building, but multi-unit construction is continuing, and homeowners are spending on renovation and repairs. It could be that laid off workers are getting snapped up to fill long open positions in an industry short of skilled labor.

For the first time in a while, it looks like smaller businesses are finding and hiring workers. Small establishments (1-49 employees) see an increase of 195,000. Medium sized firms' (50-499 employees) payrolls are up 191,000. In another turnaround, large establishments (500+ employees) shed 151,000 workers. Some of this could be the big layoffs at some of the big tech firms.

The median change in annual pay is up 7.3 percent for workers who stayed in their present employment and up 15.2 percent for those who changed jobs.

Forecasters see ADP's December employment number at 145,000. This would compare with November growth in private payrolls reported by the Bureau of Labor Statistics of 221,000. ADP's number for November was 127,000.

The national employment report from Automated Data Processing Inc. is computed from ADP payroll data and offers advance indications on the U.S. workforce. ADP's data cover more than 500,000 companies totaling more than 25 million employees. The report is produced by ADP Research Institute in collaboration with Stanford Digital Economy Lab.

Market players have become accustomed to the excitement on employment Friday and realize the rich detail of the monthly employment situation can help set the tone for the entire month. While economists have improved their nonfarm payroll forecasts over the years, it is not unusual to see surprises on employment Friday. To that end, the ADP's national employment report can help improve the payroll forecast by providing information in advance of the employment report.

The employment statistics also provide insight on wage trends, and wage inflation is high on the list of enemies for the Federal Reserve. Fed officials constantly monitor this data watching for even the smallest signs of potential inflationary pressures, even when economic conditions are soggy. If inflation is under control, it is easier for the Fed to maintain a more accommodative monetary policy. If inflation is a problem, the Fed is limited in providing economic stimulus.

By tracking jobs, investors can sense the degree of tightness in the job market. If wage inflation threatens, it's a good bet that interest rates will rise; bond and stock prices will fall. No doubt that the only investors in a good mood will be the ones who watched the employment report and adjusted their portfolios to anticipate these events. In contrast, when job growth is slow or negative, then interest rates are likely to decline - boosting up bond and stock prices in the process.