U.S. Private Sector Adds 22,000 Jobs In January, Less Than Expected

(RTTNews) - Payroll processor ADP released a report on Wednesday showing private sector employment in the U.S. increased by much less than expected in the month of January.

ADP said private sector employment rose by 22,000 jobs in January after climbing by a downwardly revised 37,000 jobs in December.

Economists had expected private sector employment to grow by 45,000 jobs compared to the addition of 41,000 jobs originally reported for the previous month.

"The 22,000 increase in private employment as reported by ADP is relatively lackluster, but taken together with annual revisions, which showed much stronger hiring in the second half of 2025, the report supports our forecast for the Federal Reserve to keep policy on hold until midyear," said Matthew Martin, Senior U.S. Economist at Oxford Economics.

The modest increase in private sector employment largely reflected a jump in employment in the education and health services sector, which added 74,000 jobs.

Meanwhile, employment in the professional and business services sector slumped by 57,000 jobs. The manufacturing sector, which has lost jobs every month since March 2024, also shed 8,000 jobs.

"Hiring remains concentrated in the services sector, with goods-producing industries lagging behind," said Martin. "Continued uncertainty over policy and near-term demand has led manufacturers to use layoffs and attrition to manage headcount."

The report also said medium establishments added 41,000 jobs, while large establishments cut 18,000 jobs. Employment at small establishments was unchanged.

ADP also said pay growth for job-stayers was little changed in January at 4.5 percent year-over-year. Annualized pay growth for job-changers slowed to 6.4 percent from 6.6 percent.

The Labor Department had been scheduled to release its more closely watched monthly jobs report on Friday, but the release has been delayed due to the four-day partial government shutdown.

Economists currently expect employment to climb by 67,000 jobs in January after increasing by 50,000 jobs in December, while the unemployment rate is expected to hold at 4.4 percent.