The U.S. labor market showed little momentum in January, with private sector hiring falling short of even modest expectations. New data from ADP points to a continuation of the low hiring trend that characterized much of 2025, reinforcing concerns about economic softness and the outlook for monetary policy.
January Hiring Falls Below Forecasts
According to the ADP report released Wednesday, private employers added just 22,000 jobs in January. The figure came in below the downwardly revised 37,000 gain recorded in December and missed the Dow Jones consensus forecast of 45,000.
Without a surge of 74,000 hires in education and health services, overall job growth would have turned negative. The data suggests hiring activity remains subdued across most sectors.
Signs of a Persistent Slowdown
ADP Chief Economist Nela Richardson said the report reflects a longer running trend rather than a single weak month. Speaking on CNBC, Richardson noted that employers have been increasingly cautious about expanding payrolls.
She also said benchmark revisions showed job gains in 2025 were weaker than initially reported, by an average of about 18,000 jobs per month, or roughly 216,000 fewer jobs over the year.
Sector Breakdown
Outside of health care related hiring, job growth was limited. Financial activities added 14,000 positions, construction gained 9,000, and trade, transportation and utilities added 4,000. Leisure and hospitality also contributed 4,000 jobs.
Several sectors posted notable losses. Professional and business services declined by 57,000 jobs, other services fell by 13,000, and manufacturing lost 8,000 positions. Nearly all net job creation came from the services sector.
Company Size and Wage Trends
Hiring gains were concentrated among mid sized companies with 50 to 499 employees. Small firms showed no net job growth, while large employers cut 18,000 positions.
Wage growth remained stable. Workers who stayed in their jobs saw pay increase by 4.5 percent, little changed from December.
Policy and Data Implications
The ADP report typically precedes the more closely watched nonfarm payrolls data from the Bureau of Labor Statistics. However, that release has been delayed due to the recent partial government shutdown.
The weak hiring data is unlikely to ease concerns at the Federal Reserve, where policymakers are closely monitoring labor market conditions for signs that additional economic support may be needed.
Conclusion
January’s ADP report suggests the U.S. labor market entered 2026 with limited momentum. With hiring concentrated in a narrow set of industries and broader weakness elsewhere, the data reinforces expectations of a prolonged period of cautious employer behavior and heightened attention from policymakers.
