Private-sector hiring slumped in January, adding just 22,000 jobs
By Alicia Wallace, CNN
(CNN) — The brief US government shutdown has delayed the official jobs report for January – with the data now set to land on February 11 instead of this coming Friday – but the first look at hiring activity in the private sector showed that employment gains sputtered to start the year.
Payroll giant ADP reported Wednesday that employers in the private sector added just 22,000 jobs in January, about half the size of the 45,000-job gain economists were expecting. Job growth slowed further from December’s employment gains that were revised down to 37,000 from 41,000.
January’s job gains were driven entirely by continued hiring in the education and health services industry, which added an estimated 74,000 jobs, ADP’s report showed. Health care, which is growing as a result of an aging population, has been one of the few industries to have experienced consistent employment expansion in recent years.
“It is the case that we have narrowed the pathway to job creation to one or two sectors,” Nela Richardson, chief economist at ADP, said Wednesday in a call with reporters.
As for the vast majority of other sectors, hiring has limped along or seen declining employment in a labor market environment that has grown increasingly less dynamic.
In January, ADP estimated that professional and business services industry shed 57,000 jobs, the sharpest loss for that sector since August 2024. Manufacturing, which has lost jobs every month since March 2024, posted a net loss of 8,000 jobs last month.
“Weak and highly concentrated growth in the labor market translates to weaker growth across the economy,” Elizabeth Renter, chief economist at NerdWallet, wrote in a note on Wednesday. “When the labor market is adding fewer jobs (and losing them in some sectors), the economy is less dynamic.”
Hiring has slowed significantly in recent years, and the US labor market has settled into a “low-hire, low-fire” state.
“For households, this may mean fewer opportunities for professional advancement and pay raises,” Renter said. “And for those out of work, a more difficult time finding a replacement job.”
Still, despite the lackluster monthly gains, wage growth has remained stable for those who have been able to stay in the labor market.
“That is the equilibrium between labor supply and labor demand,” Richardson said.
Annual pay growth for people who stayed at their jobs was 4.5% in January.
“That is a robust number; that is a number that is at a higher level than what we saw before the pandemic, when the unemployment rate was about a percentage point lower than it is now,” she said.
Pay gains for job-changers slowed to 6.4% in January from 6.6%.
ADP’s latest release included an annual revision where past employment estimates were benchmarked to the Quarterly Census of Employment and Wages data through March 2025. The QCEW, while lagged, provides a more comprehensive read on hiring activity because it’s drawn from businesses’ quarterly tax filings for unemployment insurance.
Job growth wasn’t as bleak as the initial ADP figures suggested, NerdWallet’s Renter said, adding that the latest report provides further confirmation of the slowdown seen in the labor market during the past year.
Still, ADP’s report is just one piece of the puzzle in determining where the jobs market goes from here.
“In the absence of federal data, private sector data like this helps fill in the blanks,” she wrote. “But it doesn’t provide a robust or comprehensive picture of the labor market.”
Separately, the Bureau of Labor Statistics on Wednesday provided an updated release schedule for the labor market reports delayed by the most recent shutdown:
The Job Openings and Labor Turnover Survey report for December will be released Thursday morning; the January jobs report (which will include the final benchmarking revisions for job gains through March 2025) will be released February 11; and the Consumer Price Index report for January was bumped to Friday, February 13.
This story has been updated with newly released information from the Bureau of Labor Statistics.
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