ADP Reports January Private Payrolls Increase of Only 22,000, Missing Expectations

• Education and health services added 74,000 jobs, without which the overall payroll change would have been negative. Professional and business services lost 57,000 positions, manufacturing declined by 8,000, and other services dropped 13,000.
• Mid-sized companies (50-499 workers) accounted for all job gains, while large employers cut 18,000 positions and small firms remained flat.
• Wage growth for workers staying in their jobs held steady at 4.5% year-over-year, unchanged from December. The official BLS jobs report release has been delayed due to the partial government shutdown.

ADP January Employment Report Summary

Key Figures:

• Private sector payrolls increased by only 22,000 in January 2026, significantly missing the consensus forecast of 45,000
• December's figure was revised downward to 37,000 from a higher previous estimate
• Wage growth for job-stayers remained steady at 4.5%

Sector Performance:

• Education and health services led gains with 74,000 new positions—without this sector, net job growth would have been negative
• Financial activities added 14,000 jobs; construction rose 9,000
• Professional and business services suffered the largest decline, losing 57,000 positions
• Manufacturing shed 8,000 jobs; other services dropped 13,000
• Services sector contributed virtually all net job gains (all but 1,000)

Company Size Breakdown:

• Mid-sized companies (50-499 employees) added all net jobs
• Small firms remained flat
• Large employers cut 18,000 positions

Market Implications:

The weak employment data continues the lackluster trend that characterized late 2025, suggesting a "low-hire, low-fire environment." This persistent labor market weakness may pressure Federal Reserve policymakers to consider additional economic support. The heavy concentration of growth in healthcare-related sectors, which was 2025's primary employment driver, masks significant weakness across other industries, particularly in professional services and manufacturing.

The government shutdown has delayed the release of the Bureau of Labor Statistics' official nonfarm payrolls report, which typically provides broader market confirmation. The disappointing ADP figures signal potential economic headwinds entering 2026.