Private-sector hiring rebounded in December, but the pace came in slightly below expectations, according to new data from ADP.
Companies added 41,000 jobs during the month, reversing a revised loss of 29,000 in November. While the rebound was a positive sign, it fell short of the 48,000 jobs economists surveyed by Dow Jones had expected.
Even with the improvement, the labor market ended 2025 on uncertain ground. Private payrolls declined in three of the four months leading up to December, showing that hiring momentum remains uneven and fragile.
All of December’s job growth came from service-related industries. Education and health services led the gains with 39,000 new jobs, followed by leisure and hospitality, which added 24,000. Trade, transportation, and utilities grew by 11,000 jobs, while financial services added 6,000.
Those gains were partly offset by losses in other areas. Professional and business services shed 29,000 jobs, information services declined by 12,000, and goods-producing industries lost 3,000 jobs overall, including a 5,000-job drop in manufacturing. The data highlights a clear divide between stronger service-sector hiring and continued weakness in goods production.
Small businesses accounted for nearly all the hiring in December. Companies with fewer than 500 employees drove almost the entire increase, while larger firms added just 2,000 jobs.
“Small establishments recovered from November job losses with positive end-of-year hiring, even as large employers pulled back,” said Nela Richardson.
Wage growth remained steady. Workers who stayed in their jobs saw average annual pay increases of 4.4%, unchanged from November. Those who switched jobs earned higher gains of 6.6%, slightly stronger than the prior month, suggesting labor cost pressures continue to cool.
The ADP report arrives just ahead of the more closely watched employment data from the Bureau of Labor Statistics. Economists expect the official December report to show 73,000 new jobs and the unemployment rate edging down to 4.5%.
As the first fully on-time government jobs report since the shutdown disruptions, it will offer a critical test of whether the labor market is stabilizing as 2026 begins.
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