Modest January Job Gains Conceal Manufacturing, Services Losses

Private hiring slowed sharply last month, with gains centered in health care and construction while manufacturing and professional services posted notable declines.

By yourNEWS Media Newsroom

U.S. private-sector hiring rose modestly in January, falling short of expectations as job losses in manufacturing and professional and business services offset gains elsewhere, according to ADP’s national employment report released Wednesday.

Private payrolls increased by 22,000 jobs last month, down from a downwardly revised 37,000 gain in December. Economists surveyed by Reuters had expected private employment to rise by 48,000 jobs after an initially reported 41,000 increase in December.

Job growth in January was concentrated in education and health services, which added 74,000 positions. Construction employment also increased, with payrolls rising by 9,000 jobs.

Additional gains were recorded in financial activities, leisure and hospitality, and trade, transportation and utilities. Those increases, however, were outweighed by losses in other areas of the economy.

The professional and business services sector shed 57,000 jobs during the month, while manufacturing payrolls declined by 8,000 positions, underscoring continued weakness in parts of the goods-producing and white-collar segments of the labor market.

Wage growth showed signs of cooling. Pay for workers who changed jobs increased 6.4% from a year earlier, down from 6.6% in December. Wage growth for employees who remained in their positions was little changed at 4.5%.

Financial markets showed little reaction to the ADP data.

The ADP report, which is jointly developed with the Stanford Digital Economy Lab, has historically been an inconsistent predictor of the Bureau of Labor Statistics’ private payrolls estimates. The BLS’ broader and more closely watched January employment report, originally scheduled for release Friday, was delayed by a partial federal government shutdown that ended Tuesday.

Economists continue to describe the labor market as being in a “low-hire, low-fire” phase, a dynamic attributed to factors including import tariffs and the increasing use of artificial intelligence. Federal Reserve Chair Jerome Powell said last week that labor market indicators suggest conditions may be stabilizing after a period of gradual softening.

The Federal Reserve recently left its benchmark overnight interest rate unchanged in a range of 3.50% to 3.75%.