The U.S. labor market started 2026 on a quiet note as private sector employment grew by a modest 22,000 jobs in January, according to the latest ADP National Employment Report released Wednesday. While hiring slowed significantly, annual pay for workers continued to show steady growth.
The January data revealed a stark contrast between industries. The Education and Health Services sector acted as the primary engine of growth, adding 74,000 jobs. However, these gains were largely offset by a sharp decline in Professional and Business Services, which shed 57,000 positions.
Manufacturing continued its long-term struggle, marking another month of losses in a trend that has persisted since early 2024.
“Job creation took a step back in 2025… down from 771,000 in 2024,” Nela Richardson, chief economist at ADP said. “While we’ve seen a continuous and dramatic slowdown in job creation for the past three years, wage growth has remained stable.”
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Total Private Job Gain: 22,000
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Top Performer: Education/Health Services (+74,000)
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Worst Performer: Professional/Business Services (-57,000)
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Regional Trends: The Midwest led the country with 25,000 new jobs, while the South and West both saw overall declines.
Despite the cooling demand for new hires, those currently employed are still seeing consistent raises.
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Job-Stayers: Saw a median pay increase of 4.5% year-over-year.
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Job-Changers: Experienced a higher increase of 6.4%, though this is a slight dip from the 6.6% recorded the previous month.
Large firms (500+ employees) actually saw a workforce reduction of 18,000, while medium-sized establishments provided the bulk of the month’s momentum, adding 41,000 jobs.
