The ADP national employment report shows an increase of 122,000 in private payrolls in December after an unrevised up 146,000 in November. The December gain is not materially below the consensus of up 134,000 in the Econoday survey of forecasters. Service-providers add 112,000 jobs in December while goods-producers' payrolls are up 10,000.

About half of the jobs in services in December are due to a 57,000 increase in education and health. There is also a large increase of 22,000 in leisure and hospitality. All other sectors had modest increases except for a decrease of 5,000 in professional and business services.

The December gain in payrolls for goods-producers is entirely due to a rise of 27,000 in construction that was partially offset by declines of 11,000 in manufacturing and 6,000 in natural resources and mining.

Payroll gains are concentrated in large establishments (500+ employees) with 97,000 new jobs. Small businesses (1-49 employees) add 5,000 new jobs and medium firms (50-499 employees) add 9,000.

ADP pay insights for December show job-stayers have a median annual gain of 4.6 percent. Job-changers continue to get bigger increases in pay at up 7.1 percent year-over-year in December.

The consensus sees private payrolls up 134,000 after a gain of 146,000 the month before.

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.