Private Sector Hiring Stalls in January as Wage Growth Holds Firm — Evening Brief – 02.04.26
Early signals from the labor market point to a cooling, but still resilient, employment backdrop as 2026 gets underway. With the January government payrolls report delayed by a brief federal shutdown, investors and policymakers are leaning more heavily on private-sector data to gauge momentum. The latest read from ADP suggests hiring slowed meaningfully in January, even as wage growth remained steady, reinforcing the view of a gradual deceleration rather than a sharp break in labor conditions.
U.S. private-sector employers added just 22,000 jobs in January, well below the 45,000 consensus estimate and down from December’s revised 37,000 gain, according to ADP. December’s initial estimate of 41,000 was revised lower.
“Job creation took a step back in 2025, with private employers adding 398,000 jobs, down from 771,000 in 2024,” said Nela Richardson, chief economist at ADP. “While we’ve seen a continuous and dramatic slowdown in job creation for the past three years, wage growth has remained stable.”
Wages continued to show resilience. Pay for workers who stayed in their jobs rose 4.5% year over year, up slightly from 4.4% in December. Job changers saw pay increase 6.4% year over year, though that marked a modest slowdown from December’s 6.6%.
Sector trends were mixed. Education and health services remained a bright spot, adding 74,000 jobs in January. That strength was offset by declines in professional and business services (-57,000), other services (-13,000), and manufacturing (-8,000).
Regionally, the South Atlantic recorded the largest losses, shedding 76,000 jobs, followed by the Pacific region with a 22,000 decline. The Midwest added 25,000 jobs, while the Northeast gained 17,000.
By employer size, the biggest job losses came from firms with 20 to 49 employees (-30,000) and those with more than 500 workers (-18,000). Mid-sized firms, employing 50 to 499 workers, added 41,000 jobs, led by companies with 50 to 249 employees.