The U.S. labor market barely budged in January, with hiring below even muted expectations, according to a report Wednesday from payrolls processing firm ADP.
Private companies added just 22,000 positions for the month and the number would have been negative had it not been for a surge of 74,000 hires in the education and health services category. The total was less than the downwardly revised 37,000 increase in December and below the Dow Jones consensus forecast for 45,000.
The report starts 2026 off on basically the same note where 2025 ended: A lackluster job market in a low-hire, low-fire environment that likely will do little to quell fears from Federal Reserve policymakers that more support may be needed.
“Hiring is softening. It continues a pattern that we’ve noticed for the past three years,” Nela Richardson, ADP’s chief economist, said on CNBC. “Employers are very reticent to hire in the current economy.”
Richardson noted that benchmark revisions the firm employed to its data showed that job gains in 2025 already were weaker than reported, by about 18,000 per month, or 216,000 for the year.
Outside of the health care-related jobs, the primary driver behind employment growth last year, financial activities added 14,000 positions while construction rose by 9,000 and both the trade, transportation and utilities and the leisure and hospitality industries contributed 4,000.
However, several sectors reported losses.
Professional and business services tumbled 57,000, the other services category lost 13,000 and manufacturing was down 8,000. All but 1,000 net jobs came from the services sector.
From a size standpoint, companies employing between 50 and 499 workers added all the jobs, with small firms flat and large employers down 18,000. The totals don’t add up exactly because of rounding.
Wage gains were little changed from December, with those staying in their jobs seeing growth of 4.5%.
The ADP report typically precedes the more closely watched Bureau of Labor Statistics nonfarm payrolls report, which normally would be out Friday. However, the just-ended partial government shutdown has caused a delay in the BLS release.