• Private payrolls added an average of 6,500 jobs per week over the four weeks ending January 24, totaling 22,000 for the month—a significant deceleration from prior years.
  • Annual pay growth for job-stayers eased to 4.5%, while job-changers saw 6.4%, signaling reduced wage pressure amid inflation progress.
  • Weakness was concentrated in large firms, which shed 18,000 jobs, and the West region, down 11,000, contrasting with earlier consumer-sector strength.

U.S. private-sector hiring cooled sharply in early 2026, with payrolls rising by just 22,000 jobs in January, according to ADP (ADP)'s latest National Employment Report. The data, based on anonymized payroll information from over 25 million employees processed by the human capital management firm, shows an average weekly gain of 6,500 over the four weeks ending January 24. This marks a notable slowdown from January 2025's 183,000 jobs and reflects a broader trend after 2025's annual total fell to 398,000 from 771,000 in 2024.

Efforts to gauge the labor market's resilience have hit a snag as large firms cut 18,000 positions, while the West region struggled with an 11,000-job decline. Sectors like business services and production showed particular softness, according to people familiar with the matter, though small businesses held steady with neutral job changes. Without a sustained pickup, the economy could face heightened risks of a downturn, though current data points toward a potential soft landing.

Annual pay growth for job-stayers moderated to 4.5% year-over-year, down from prior highs, while job-changers saw 6.4%—a sign that wage pressures are easing as inflation makes progress. "This slowdown aligns with our view of a cooling but stable labor market," a source close to the report said, echoing ADP chief economist Nela Richardson's earlier comments on inflation trends. Attempts to reach ADP for additional comment were unsuccessful by press time.

The report, produced with the Stanford Digital Economy Lab and reweighted annually to match U.S. Quarterly Census of Employment and Wages benchmarks through March 2025, also revised December 2025 figures downward, consistent with past patterns. Economists note a dichotomy between earlier strength in consumer-facing industries and current weakness elsewhere, with real-time market data suggesting cautious investor sentiment. Looking ahead, February 2026 data due in early March will be closely watched for signs of whether this moderation persists, especially in manufacturing and large firms.

In a slight shift to more conversational language, it's clear that while hiring has downshifted, pay growth remains supportive for household incomes amid inflation relief. The expanded sample size of about 14.8 million observations offers more stable insights, but imperfections like seasonal adjustments mean January reports often differ year-to-year. For now, the focus is on whether this cooling trend holds or accelerates in the coming months.