Private Sector Job Growth Slows to a Two-Year Low

ADP's National Employment Report showed private businesses added the fewest jobs since January of 2021

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Private sector job growth slumped to the lowest level in two years last month as bad weather slowed hiring.

Private businesses in the U.S. added 106,000 positions in January, well below economists’ forecasts and the fewest since January 2021, payroll services provider ADP reported Wednesday.

ADP Chief Economist Nela Richardson blamed the low number on “weather-related disruptions on employment during our reference week.” She noted that hiring was greater during other weeks in the month, “in line with the strength we saw late last year.”

All of the monthly gain could be attributed to the services sector, which had an increase of 109,000 jobs. As has been the case since the easing of pandemic restrictions, hiring in leisure and hospitality soared, rising 95,000. Other job increases were seen in financial services (+30,000), education and health services (+12,000), professional and business services (+8,000), and information (+5,000). Trade, transportation, and utilities businesses lost 41,000 positions.

Jobs in the goods sector fell 3,000, led lower by construction (-24,000) and natural resources and mining (-2,000). Hiring was up 23,000 in manufacturing.

ADP National Employment Report; MoM Figures


Pay Gains

Median annual pay increases for those who stayed at their jobs was 7.3%, the same as in December. Job changers’ compensation jumped 15.4% from the year before, slightly higher than in the previous month.

On Friday, the Labor Department is set to release the January nonfarm payroll report, which is expected to show a rise of 185,000.

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  1. Automatic Data Processing. "ADP National Employment Report: January 2023."

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