US private hiring missed forecasts in January, ADP data show

US companies added fewer jobs than expected in January, pointing to a continued slowdown in the labour market at the start of the year. Private-sector payrolls increased by 22,000 after a downward revision to the prior month, according to ADP Research data released Wednesday (February 4). The figure was short of all estimates in a Bloomberg survey of economists.

The ADP figures will likely offer this week’s fullest picture of the labour market in January, as official data from the Bureau of Labour Statistics was delayed due to the partial government shutdown. BLS said it will reschedule the January jobs report, which was originally due Friday.

While there have been some signs of stabilisation in recent months, the weaker-than-expected private payroll growth suggests the labour market was still cooling in January. A number of large companies have recently announced plans to cut jobs, including Dow Inc. and Amazon.com Inc., but the latest unemployment claims data suggest layoffs are still limited.

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“I think there are signs of that stabilisation in here,” said Sarah House, a senior economist at Wells Fargo & Co. “What we saw today was a very stagnant picture of the labour market. Hiring isn’t getting materially worse, but it’s not getting materially better.”

Education and health services led the advance in hiring, and have been responsible for much of the growth in payrolls in the years since the pandemic. While overall hiring bounced back strongly initially, job gains have been more tepid recently.

“The last two years of stability have been ones that I’ve been watching with weariness, and the fact that it is such a narrow path of hiring has also been a concern,” Nela Richardson, chief economist at ADP, said on a call with reporters. Richardson is a contributor to Bloomberg Television.

Meantime, professional and business services shed the most jobs since June. Payrolls declined at large businesses and were stagnant at firms with fewer than 50 employees. ADP bases its findings on payrolls covering more than 26 million US private-sector employees.

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The ADP report, published in collaboration with the Stanford Digital Economy Lab, showed workers who changed jobs saw a 6.4% increase in pay, decelerating from the prior month. Those who stayed put saw a slight pickup in pay gains.

BLS’s January jobs report should be rescheduled soon, now that the shutdown has ended. That release will also include revisions to annual payrolls, which are expected to show much slower job growth in the year through March 2025 than initially thought.