ADP Numbers Suggest Cooler January Job Growth as Private Hiring Slows Sharply

Private-sector job growth in the U.S. looked noticeably softer in January, based on the latest reading from ADP. The report showed that employers added only 22,000 jobs for the month—far below what many economists were expecting—adding to evidence that the labor market is cooling after a long stretch of resilience.

While one month never tells the whole story, the details inside the report point to a labor market that’s still functioning, but moving more cautiously: some service categories kept hiring, while white-collar and goods-producing areas struggled. Wage growth, meanwhile, continued to ease from earlier highs, suggesting pay pressures may be stabilizing rather than re-accelerating.

What the ADP report said in plain English

ADP’s National Employment Report estimated that U.S. private employers added 22,000 jobs in January. That number came in well below forecasts that generally clustered around the mid–tens of thousands range, and it followed a downwardly revised gain in December.

It’s important to note what ADP measures: it focuses on private-sector payrolls, not total employment across the full economy. In other words, it doesn’t include government hiring. Even so, ADP is widely watched because it offers an early read on hiring momentum—especially in weeks when official government data is delayed or limited.

Why this surprised markets and forecasters

Expectations heading into the release were for a modest increase in private hiring, not a near-standstill. A gain of 22,000 suggests businesses are adding staff very selectively—filling must-have roles, but hesitating on broader expansion.

ADP itself described the month as “lackluster,” and highlighted that health care was a standout while several major job categories went the other way.

Which industries added jobs—and which lost them

January’s hiring wasn’t evenly spread out. A few areas did the heavy lifting, while others pulled the total down. According to coverage of the release, education and health services added 74,000 jobs, and construction posted a smaller gain.

But the weak headline number was driven by declines elsewhere—most notably in sectors tied to office-heavy employment and production. Professional and business services fell by 57,000 jobs, and manufacturing lost 8,000.

Quick sector snapshot

Sector	January Direction	What it suggests
Education & Health Services	Up (largest gain)	Demand for care and staffing remains strong
Construction	Up	Project pipelines still need workers
Professional & Business Services	Down (largest drop)	White-collar firms may be trimming costs
Manufacturing	Down	Factory hiring remains under pressure

One big takeaway: “People-facing” and essential services helped keep the month positive, but weakness in business services and manufacturing was strong enough to drag overall hiring close to flat.

Hiring by company size: big firms looked weaker

Another detail that stood out was how hiring differed depending on the size of the employer. Reports summarizing the data showed that mid-sized firms (50–499 employees) added jobs, while large employers shed jobs, and small-business hiring was roughly flat.

This pattern can happen when larger companies become more cautious about overhead, while medium-sized businesses keep adding roles in targeted areas. It can also reflect timing: large firms may pause hiring at the start of a year while budgets reset, especially after year-end planning and performance reviews.

What happened to wage growth

Even with slower hiring, pay increases didn’t collapse. Instead, the wage story looked like a continuation of a longer trend: wage growth is cooling gradually from the very hot levels seen earlier in the post-pandemic recovery. ADP’s pay measures indicated that:

• Job-stayers saw about 4.5% annual pay growth.

• Job-changers saw about 6.4% annual pay growth, slightly slower than the month before.

Those figures matter because job-switchers typically see bigger raises. When the job-changer premium narrows, it can be a sign that companies feel less pressure to bid aggressively for talent.

How this fits the “low-hire, low-fire” labor market

A helpful way to understand the current labor market is the idea that it’s becoming “low-hire, low-fire.” Companies aren’t laying people off in huge waves, but they also aren’t hiring quickly. Instead, many employers are holding steady—replacing critical departures, backfilling essential roles, and avoiding big expansions until demand looks clearer.

This kind of environment can feel confusing to job seekers: unemployment might remain relatively low, yet it can still feel hard to land a new role quickly because fewer openings are being posted and recruiters are moving slower. It also means monthly job totals can bounce around more than usual, depending on which industries happen to be hiring or freezing at that moment.

Why manufacturing and business services are struggling

1) Manufacturing: a long patch of caution

Manufacturing job losses in January weren’t huge on their own, but they added to a broader narrative of softness. ADP’s own commentary has pointed out that manufacturing has faced ongoing pressure over an extended period.

Reasons manufacturing can cool even when the overall economy looks “fine” include slower goods demand, tighter margins, and productivity upgrades that reduce the need for additional headcount. Businesses may also delay factory hiring when they’re uncertain about future orders.

2) Professional and business services: white-collar rebalancing

The bigger surprise was the sharp decline in professional and business services. When that category contracts, it can reflect cost cutting in consulting, temporary staffing, back-office support, and other office-heavy roles.

That doesn’t automatically mean a recession is here. But it can be an early warning that businesses are getting more selective, especially if they’re dealing with uncertainty around demand, profit targets, or investment plans.

Health care stood out—again

If there was a “bright spot,” it was health care and related services. The category added 74,000 jobs and was described as a standout in a slow month.

Health care often hires steadily because demand is less sensitive to short-term economic swings. People still need care, clinics still need staff, and aging demographics can keep the pressure on the system even when other industries pull back.

Does ADP predict the official jobs report?

Not perfectly. ADP is useful as a signal, but it has a reputation for being an inconsistent month-to-month predictor of the U.S. government’s official jobs report from the Bureau of Labor Statistics (BLS). Sometimes the two line up closely; other times they diverge.

That said, this particular ADP reading still matters because it supports a theme seen in other indicators: the labor market may be cooling, and the pace of hiring appears slower than it was during the strongest recovery period.

Why the timing mattered this month

This ADP release drew extra attention because the official BLS January jobs report was delayed due to a partial government shutdown, according to reporting on the situation. With fewer government releases available on schedule, private datasets like ADP can carry more weight in shaping the week’s narrative.

In practical terms: when the “main” scoreboard is late, everyone watches the “backup” scoreboard more closely.

What this could mean for inflation and the Federal Reserve

Hiring and wage growth are closely tied to inflation debates. If job growth slows and pay pressures cool, it can reduce the risk that higher labor costs keep pushing prices up. That’s one reason investors and policymakers pay attention to wage measures like the ones ADP publishes.

At the same time, the Fed doesn’t react to one report in isolation. Policymakers typically look for consistent trends across multiple data sources: job growth, unemployment, participation, wage growth, inflation readings, and measures of business activity. A single slow ADP month may be a warning sign—but it isn’t “the verdict.”

What to watch next

1) The next official employment report

The biggest follow-up is the delayed BLS release for January. If the government report also shows weak hiring, it would reinforce the message from ADP. If it’s stronger, it would remind everyone that ADP and BLS can differ significantly month to month.

2) Whether weakness spreads beyond a few sectors

One soft month can be driven by a handful of industries. A more serious slowdown usually looks broader—weak hiring across many categories for several months, plus rising layoffs and weakening pay growth. For now, the pattern in January looks more like a mixed labor market than a clear collapse.

3) Wage momentum for job-changers

Job-changer pay growth at 6.4% is still elevated compared with long-run norms, but the slight downshift suggests pressure may be easing. If that trend continues, it could support the view that the labor market is normalizing.

The bigger picture: cooling doesn’t necessarily mean crashing

It’s tempting to see a weak hiring number and assume trouble is guaranteed. But the more accurate interpretation is usually more nuanced: a labor market can cool as it returns from an unusually hot period to something more sustainable.

In that scenario, slower hiring is the economy “taking a breath.” Businesses become more disciplined. Workers may find it harder to jump jobs instantly, but the risk of mass layoffs stays lower if companies are still profitable and demand remains steady.

That’s why analysts often focus on whether slow hiring is accompanied by rising unemployment and widespread layoffs. The January ADP report, by itself, mainly signals caution—not panic—especially with pockets of strong hiring still visible in health care and other service areas.

Key takeaways

• Private payrolls rose by 22,000 in January, signaling a cooler pace of job growth than forecasters expected.

• Education and health services led hiring, while professional and business services and manufacturing lost jobs.

• Wage growth held steady for job-stayers and eased slightly for job-changers, suggesting pay pressures may be stabilizing.

• The report is a useful signal, but ADP and the official BLS data can diverge, so the next government release will be a major confirmation point.

FAQs

1) What is the ADP National Employment Report?

It’s a monthly estimate of U.S. private-sector employment changes, based on ADP payroll data and produced with research partners.

2) How many jobs did ADP say were added in January?

ADP estimated that private employers added 22,000 jobs in January.

3) Which sector was strongest in January?

Education and health services were the standout, adding 74,000 jobs.

4) Which sector was weakest in January?

Professional and business services recorded a large decline, losing 57,000 jobs.

5) Did wage growth rise or fall?

Wage growth was roughly steady for job-stayers (about 4.5%) and eased slightly for job-changers (about 6.4%).

6) Should people treat ADP as the official jobs number?

No. ADP is a helpful early indicator, but it’s not the government’s official employment report, and it doesn’t always match the BLS data month to month.

Bottom line: ADP’s January reading points to a cooler start for job growth in 2026, with hiring concentrated in health-related services and notable weakness in business services and manufacturing. Investors, employers, and workers will now look to upcoming official data to see whether this slowdown is a brief wobble—or the beginning of a broader trend.

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