MW ADP jobs report shows paltry 22,000 increase in private hiring. Sluggish labor market is not getting any better.

By Jeffry Bartash

Job creation has plummeted since the start of the trade wars and the immigration crackdown

Amazon is closing all its Amazon Go convenience stores and resorting to another round of large layoffs.

ADP said businesses created a meager 22,000 new jobs in January, suggesting little improvement in a fragile labor market in which work has become much harder to find.

Wall Street forecasters had predicted a 45,000 increase in private-sector jobs last month.

The pace of job creation collapsed last spring as trade wars dented the confidence of businesses and forced them to put hiring plans on hold. Somehow the economy has still managed to grow at an accelerated pace.

Hiring has partly recovered since then, but not by much. Most of the new jobs are concentrated in just a few kinds of businesses - healthcare providers, restaurants and hotels.

"Hiring has weakened," said Nela Richardson, chief economist at ADP, the nation's largest processor of payroll checks. "It's taking longer to find a job."

The health of the job market is the biggest worry of the Federal Reserve as it weighs whether to cut interest rates again in 2026.

The Fed left a key rate unchanged last week because of what it viewed as signs of stabilization in the job market. Richardson was reluctant to say she saw similar stabilization, but she said low unemployment and rising wages were positive signs.

The ADP report is normally a second-tier labor-market gauge, but once again it has taken center stage amid yet another delay in the official U.S. employment report that had been due this Friday.

A partial government shutdown on Monday and Tuesday is expected to push publication of that report into next week.

Wall Street economists are forecasting a 60,000 increase in the survey, which is produced by the U.S. Bureau of Labor Statistics.

Both the BLS and ADP estimates are net figures, reflecting jobs created compared with jobs destroyed.

Key details: Most of the new hiring in January was concentrated once again in healthcare.

Most other major sectors shed jobs, including manufacturers and professional businesses. It's possible companies are using technology such as robotics and artificial intelligence to replace some white-collar jobs.

Workers who stayed in the same job saw their incomes rise 4.5% in the 12 months ending in January, ADP said. Job switchers saw a 6.4% gain. Both figures were barely changed from the prior month.

The increase in private-sector employment in December was updated to show a slightly smaller 37,000 increase.

Big picture: The U.S. labor market may have bottomed out and hiring could pick up soon, but don't expect the big monthly increases in new jobs that have been common over the past decade.

Businesses are still hesitant to hire because of uncertainty over U.S. tariffs. The duties have raised prices, hurt sales and raised questions about future demand.

At the same time, a sharp reduction in immigration has reduced the pool of available workers. Some businesses have sought to use AI to perform some work that people used to do.

Looking ahead: "The economy is less dynamic," said Elizabeth Renter, senior economist at NerdWallet. "For households this may mean fewer opportunities for professional advancement and pay raises. And for those out of work, a more difficult time finding a replacement job."

Market reaction: The Dow Jones Industrial Average DJIA and S&P 500 SPX were set to rise in Wednesday trading.

-Jeffry Bartash

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

February 04, 2026 09:18 ET (14:18 GMT)

Copyright (c) 2026 Dow Jones & Company, Inc.