Key Points

Private businesses added a mere 22,000 jobs in January. This figure falls short of the downwardly revised December increase of 37,000 and is also below the Dow Jones consensus expectation of 45,000. This report sets a tone for the beginning of 2026 that is largely consistent with the end of 2025: a sluggish job market characterized by low hiring and low layoffs, offering little reassurance to Federal Reserve policymakers who are concerned that additional supportive measures may be necessary.

A report released Wednesday by payroll processor Automatic Data Processing Inc revealed that the U.S. labor market showed almost no momentum in January, with hiring figures falling short of already modest expectations. Private employers added only 22,000 positions for the month; excluding a surge of 74,000 hires in the education and health services sectors, the overall job growth would have been negative. This total not only missed the downwardly revised December figure of 37,000 but also fell short of the Dow Jones consensus estimate of 45,000. This report establishes a start to 2026 that echoes the conclusion of 2025: a persistently weak employment landscape operating in a low-hiring, low-firing environment. This trend does little to ease the concerns of Federal Reserve policymakers, who worry that more stimulus may be needed to bolster the economy. Beyond healthcare-related roles, which were the primary driver of last year's job growth, the financial activities sector added 14,000 positions, construction added 9,000, while both the trade/transportation/utilities and leisure/hospitality sectors each added 4,000 jobs. However, several industries experienced job losses. The professional and business services sector shed 57,000 jobs, other services lost 13,000, and manufacturing declined by 8,000. Of the net new jobs, all but 1,000 originated from the service sector. Analyzed by company size, firms with 50 to 499 employees accounted for all of the job gains; small businesses saw no net change, while large enterprises cut 18,000 positions. Due to rounding, the sum of the components shows a slight variance from the total. Wage growth remained largely unchanged from December, with median annual pay for workers still on the job increasing by 4.5%. The ADP report typically precedes the highly anticipated nonfarm payrolls report from the U.S. Bureau of Labor Statistics (BLS), which was originally scheduled for release on Friday. However, due to a partial U.S. government shutdown, the release of the BLS report has been postponed again and will only be published once the political impasse is resolved.