The recent US government shutdown has postponed the release of the official jobs report for January, which is now scheduled for February 11 rather than this Friday. However, initial insights into private sector hiring indicate that employment growth has faltered at the beginning of the year. Payroll giant ADP reported Wednesday that employers in the private sector added only 22,000 jobs in January, approximately half the anticipated gain of 45,000 jobs. Job growth experienced a further deceleration, with December’s employment gains revised downward to 37,000 from the previously reported 41,000. According to ADP’s report, the job gains in January were exclusively attributed to ongoing recruitment within the education and health services sector, which contributed an estimated 74,000 positions. Health care, driven by an aging population, has emerged as one of the few sectors to witness steady employment growth in recent years. “It is the case that we have narrowed the pathway to job creation to one or two sectors,” stated Nela Richardson.
In contrast to the majority of other sectors, employment growth has stagnated or experienced a downturn in a labor market that has become progressively less dynamic. In January, ADP estimated that the professional and business services industry experienced a reduction of 57,000 jobs, marking the most significant decline for that sector since August 2024. Manufacturing, having experienced a decline in employment every month since March 2024, recorded a net reduction of 8,000 jobs in the previous month. “Weak and highly concentrated growth in the labor market translates to weaker growth across the economy,” stated Elizabeth Renter in a note on Wednesday. “When the labor market is adding fewer jobs (and losing them in some sectors), the economy exhibits reduced dynamism.” The pace of hiring has markedly decelerated in recent years, resulting in the US labor market adopting a “low-hire, low-fire” condition. “For households, this may signify a reduction in opportunities for professional advancement and salary increases,” Renter stated. “For individuals currently unemployed, securing a new position presents a greater challenge.”
Nonetheless, in spite of the tepid monthly increases, wage growth has exhibited stability for individuals who have managed to remain in the labor market. “That is the equilibrium between labor supply and labor demand,” stated Richardson. In January, the annual pay growth for individuals who remained in their positions was recorded at 4.5%. “That is a robust number; that is a number that is at a higher level than what we saw before the pandemic, when the unemployment rate was about a percentage point lower than it is now,” she stated. In January, the increase in pay for individuals who changed jobs decelerated to 6.4%, down from the previous rate of 6.6%. ADP’s most recent release featured an annual revision in which previous employment estimates were adjusted to align with the Quarterly Census of Employment and Wages data through March 2025. The QCEW, despite its lag, offers a more thorough perspective on hiring trends as it is based on businesses’ quarterly tax submissions for unemployment insurance. Job growth was not as dire as the preliminary ADP figures indicated, according to Renter, who noted that the most recent report offers additional validation of the deceleration observed in the labor market over the past year.
Nonetheless, ADP’s report represents merely one component in the broader analysis of the trajectory of the jobs market moving forward. “In the absence of federal data, private sector data like this serves to fill in the gaps,” she wrote. “However, it fails to deliver a robust or comprehensive view of the labor market.” In a separate announcement, the Bureau of Labor Statistics on Wednesday issued a revised schedule for the labor market reports that were postponed due to the recent shutdown: The Job Openings and Labor Turnover Survey report for December is scheduled for release on Thursday morning. The January jobs report, which will incorporate the final benchmarking revisions for job gains through March 2025, is set to be published on February 11. Additionally, the Consumer Price Index report for January has been rescheduled to Friday, February 13.