U.S. Labor Market Shows Weak Job Growth in January 2026

The U.S. labor market exhibited minimal growth in January 2026, as reported by payroll processing firm ADP. Private sector employment increased by only 22,000 jobs, significantly lower than the anticipated 45,000 and down from a revised 37,000 in December. The modest job gains were primarily driven by a surge in the education and health services sector, which added 74,000 positions. However, several sectors experienced notable job losses, including professional and business services, which saw a decline of 57,000 jobs, marking the sector's sharpest loss since August 2024.

Private-sector hiring slumped in January, adding just 22,000 jobsPrivate payrolls rose by just 22,000 in January, far short of expectations, ADP saysADP: Private sector hiring on slumpADP Employment Report Massively Revised to 2010 with Huge Erratic Differences in Month-to-Month Job Creation & Losses

Nela Richardson, ADP's chief economist, indicated that the labor market has been in a "low-hire, low-fire" state for the past three years. This trend reflects a broader economic environment where employers are hesitant to expand their workforce. The report also highlighted that job growth in 2025 was weaker than previously reported, with an average downward revision of 18,000 jobs per month, totaling 216,000 fewer jobs for the year.

Private-sector hiring slumped in January, adding just 22,000 jobsPrivate payrolls rose by just 22,000 in January, far short of expectations, ADP saysADP: Private sector hiring on slumpADP Employment Report Massively Revised to 2010 with Huge Erratic Differences in Month-to-Month Job Creation & Losses

While the education and health services sector continued to thrive, other industries struggled. The manufacturing sector has faced job losses every month since March 2024, with January reporting a decline of 8,000 jobs. Additionally, the construction industry added only 9,000 jobs, and the trade, transportation, and utilities sectors contributed 4,000 jobs. The overall employment landscape remains uneven, with small firms showing no net job growth and large employers reducing their workforce by 18,000 jobs.

Private-sector hiring slumped in January, adding just 22,000 jobsPrivate payrolls rose by just 22,000 in January, far short of expectations, ADP saysADP: Private sector hiring on slumpADP Employment Report Massively Revised to 2010 with Huge Erratic Differences in Month-to-Month Job Creation & Losses

Despite the sluggish job growth, wage gains for those remaining in their positions remained stable at 4.5% in January. However, Elizabeth Renter, chief economist at NerdWallet, noted that the concentration of job creation in just a few sectors could lead to weaker overall economic growth. The lack of diverse job opportunities may hinder professional advancement and make it more challenging for unemployed individuals to find new positions.

Private-sector hiring slumped in January, adding just 22,000 jobs

The ADP report precedes the Bureau of Labor Statistics (BLS) nonfarm payrolls report, which has been delayed due to a brief government shutdown. The BLS is expected to release the January jobs report on February 11, which will include final benchmarking revisions for job gains through March 2025. ADP's report also underwent significant revisions, adjusting historical employment data back to 2010, which revealed discrepancies in month-to-month job creation figures.

Private-sector hiring slumped in January, adding just 22,000 jobs

The reliability of ADP's employment data has been called into question due to its reliance on a limited sample of payrolls processed, which may not represent the entire labor market accurately. The Quarterly Census of Employment and Wages (QCEW) is considered the gold standard for payroll data but lags behind as it is based on quarterly tax filings. The discrepancies between ADP's revised data and previous reports highlight the challenges in assessing employment trends accurately.

ADP Employment Report Massively Revised to 2010 with Huge Erratic Differences in Month-to-Month Job Creation & Losses

• “Hiring is softening. It continues a pattern that we've noticed for the past three years,” — Nela Richardson, Chief Economist, ADP

Private payrolls rose by just 22,000 in January, far short of expectations, ADP says

• “Weak and highly concentrated growth in the labor market translates to weaker growth across the economy,” — Elizabeth Renter, Chief Economist, NerdWallet

Private-sector hiring slumped in January, adding just 22,000 jobs

• “In the absence of federal data, private sector data like this helps fill in the blanks,” — Elizabeth Renter, Chief Economist, NerdWallet

Private-sector hiring slumped in January, adding just 22,000 jobs

The January 2026 ADP report underscores ongoing challenges in the U.S. labor market, with implications for economic growth and employment opportunities.

Private-sector hiring slumped in January, adding just 22,000 jobs