Private Hiring Slows Sharply in January as Job Market Stalls, ADP Finds

Private-sector hiring barely moved in January, pointing to a sluggish start for the U.S. labor market in 2026. New data from payroll processor ADP shows that employers added far fewer jobs than expected, continuing the slow-hiring trend seen through much of last year.

Private companies added just 22,000 jobs in January, well below both December’s revised gain of 37,000 and economists’ forecast of 45,000. Without a large boost from education and health services, which added 74,000 jobs, overall private payroll growth would have turned negative for the month.

Hiring Remains Weak Across Most Industries

January’s report suggests the labor market remains stuck in what economists describe as a “low-hire, low-fire” environment. Companies are holding onto workers but remain cautious about expanding payrolls.

According to ADP’s chief economist, hiring softness has become a long-running pattern rather than a short-term pause. Employers, facing uncertainty around economic growth and costs, appear reluctant to add new staff.

ADP also noted that updated benchmark revisions showed job growth in 2025 was weaker than previously reported, averaging about 18,000 fewer jobs per month. That revision lowered total job gains last year by roughly 216,000 positions.

Health Care Drives Most of the Gains

Job growth in January was heavily concentrated in a few areas. Education and health services once again carried the bulk of hiring, continuing a trend that dominated much of last year.

Other sectors that added jobs included:

• Financial activities: +14,000
• Construction: +9,000
• Trade, transportation, and utilities: +4,000
• Leisure and hospitality: +4,000

Outside of these gains, employment growth was limited, with nearly all net job additions coming from service-related industries.

Several Key Sectors Shed Jobs

While some industries added workers, others posted notable losses:

• Professional and business services: -57,000
• Other services: -13,000
• Manufacturing: -8,000

The sharp drop in professional and business services was the largest drag on overall employment and highlights growing caution among white-collar employers.

Mid-Sized Firms Do the Hiring

By company size, job gains came entirely from mid-sized firms with 50 to 499 employees. Small businesses showed little change in payrolls, while large employers cut about 18,000 jobs.

This pattern suggests that while mid-sized companies remain active, larger firms may be trimming costs or delaying expansion plans.

Wage Growth Holds Steady

Despite slower hiring, wage growth showed little movement. Workers who stayed in their jobs saw pay rise 4.5% year over year, roughly unchanged from December. This steady wage growth suggests employers are still competing to retain existing workers, even as they slow new hiring.

What Comes Next for the Labor Market

The ADP report is typically released ahead of the government’s nonfarm payrolls report, which is more closely watched by markets and policymakers. However, the recent partial government shutdown has delayed the release of official employment data, leaving investors with fewer clues about the broader labor market.

For now, January’s ADP figures reinforce the view that the U.S. job market is cooling but not collapsing. Hiring remains slow, layoffs remain limited, and wage growth is stable a combination that may keep policymakers cautious as they assess whether the economy needs further support in the months ahead.

If this trend continues, job growth in early 2026 may depend heavily on health care and service sectors, while other industries remain on the sidelines. For direct financing consultations or mortgage options for you visit 👉 Nadlan Capital Group.