Small and Mid-Sized Firms Drive Modest Rebound in U.S. Private Hiring — Evening Brief – 01.07.26
U.S. private-sector employment posted a modest rebound in December, adding 41,000 jobs after a revised 29,000 decline in November, according to data released Wednesday by ADP. While the improvement marked a return to growth, hiring still fell short of the 47,000 consensus forecast, reinforcing the view that labor-market momentum remains fragile heading into 2026.
The pickup was driven almost entirely by small- and mid-sized employers. Small businesses added 9,000 jobs in December, while medium-sized firms contributed 34,000. Large employers—defined as those with more than 500 workers—added just 2,000 jobs, signaling continued caution among larger corporations amid slowing growth and tighter cost controls.
“Small establishments recovered from November job losses with positive end-of-year hiring, even as large employers pulled back,” said Nela Richardson, chief economist at ADP. The divergence highlights a labor market that is increasingly bifurcated, with smaller firms still filling roles while larger organizations remain defensive.
By sector, service-providing industries continued to do the heavy lifting, adding 44,000 jobs overall. Education and health services once again led the way, posting a 39,000 gain and extending a trend that has accounted for much of the past year’s employment growth. Leisure and hospitality added another 24,000 jobs, benefiting from seasonal demand and resilient consumer spending.
In contrast, goods-producing industries shed 3,000 jobs. Manufacturing payrolls declined by 5,000, while professional and business services (-29,000) and information (-12,000) also recorded notable job losses—areas often sensitive to economic uncertainty and corporate belt-tightening.
Wage growth remained steady. Workers who stayed in their jobs saw pay rise 4.4% year over year, unchanged from November. Job changers continued to command a premium, with pay gains accelerating to 6.6% from 6.3% the prior month.
The ADP report points to a labor market that is stabilizing but far from reaccelerating—supporting the Federal Reserve’s cautious stance as it weighs softening employment trends against still-elevated wage growth.