The U.S. labor market showed minimal growth in January 2026, with private companies adding only 22,000 jobs, according to a report from ADP.
This number fell short of the Dow Jones consensus forecast, which expected an increase of 45,000 jobs. The total job growth for January was also lower than the downwardly revised figure of 37,000 jobs added in December 2025.
The primary driver for the increase in January was a surge of 74,000 hires in the education and health services sector. Without this boost, the overall job growth would have been negative.
Other sectors contributed to job growth as well, with financial activities adding 14,000 positions, construction increasing by 9,000, and both trade, transportation, and utilities and leisure and hospitality sectors contributing 4,000 jobs each.
Despite some sectors showing growth, several reported losses. The professional and business services sector experienced a significant drop, losing 57,000 jobs in January.
Additionally, the other services category lost 13,000 jobs, and manufacturing saw a decrease of 8,000 jobs. Most job gains came from the services sector, indicating a lopsided recovery.
In terms of company size, businesses with 50 to 499 employees were the only group to add jobs, while small firms remained flat. Large employers, however, reduced their workforce by 18,000 jobs.
This trend suggests that medium-sized companies are currently more stable compared to larger businesses.
Wage growth for employees who kept their jobs remained steady, with an increase of 4.5% from December 2025. This consistent wage growth may offer some relief to workers in a challenging labor market.
The ADP report typically precedes the Bureau of Labor Statistics (BLS) nonfarm payrolls report, which is usually released shortly after.
However, due to a partial government shutdown, the release of the BLS report has been delayed. This situation leaves many analysts and investors waiting for more comprehensive data on the job market.
The lackluster job growth and ongoing challenges the labor market faces may raise concerns among Federal Reserve policymakers about the need for additional economic support.
As the economy continues to show signs of weakness, the focus will likely remain on employment trends and their implications for monetary policy moving forward.
