The US labour market showed little momentum at the start of 2026, with private-sector hiring falling short of even modest expectations, according to a report released on Wednesday by payrolls firm ADP.
Private employers added just 22,000 jobs in January, well below the Dow Jones forecast of 45,000 and lower than December’s downwardly revised gain of 37,000.
Without a strong increase in education and health services employment, the overall figure would have been negative, highlighting the fragility of hiring conditions.
The data suggests the labour market remains stuck in what economists describe as a low-hire, low-fire environment, where companies are reluctant to expand payrolls but also hesitant to lay off workers.
Education, health services lead employment gains
Job growth was heavily concentrated in a handful of sectors.
Education and health services added 74,000 positions, making it the primary driver of overall employment gains.
Construction added 9,000 jobs, while financial activities, leisure and hospitality, and trade, transportation and utilities recorded modest increases.
However, several key sectors saw losses.
Professional and business services shed 57,000 jobs, manufacturing declined by 8,000, and other services fell by 13,000.
Nearly all net job creation came from services, underscoring ongoing weakness in more cyclical parts of the economy.
From a company-size perspective, mid-sized firms with 50 to 499 employees accounted for all net job gains.
Small businesses showed no net change, while large employers cut 18,000 positions.
Wage growth cools slightly
Wage growth showed signs of stabilisation. Employees who changed jobs saw pay rise 6.4% year-on-year, slightly below December’s 6.6%.
For workers who stayed in their roles, wage growth was unchanged at 4.5%.
The moderation in wage pressures may offer some reassurance to policymakers concerned about persistent inflation, though the broader slowdown in hiring could raise questions about economic momentum.
Policy and data uncertainty loom
The ADP report arrives amid uncertainty over official labour data, with the Bureau of Labor Statistics’ closely watched nonfarm payrolls report delayed due to a recent partial government shutdown.
The disruption has complicated efforts to gauge the true state of the labour market.
Federal Reserve Chair Jerome Powell said recently that labour indicators suggest conditions may be stabilising after a period of gradual softening.
The central bank has kept its benchmark interest rate in the 3.50%–3.75% range.
Economists say factors such as import tariffs and the rise of artificial intelligence are reshaping hiring patterns, contributing to cautious corporate behaviour and uneven job creation.
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