The Job Market Slowdown: A Closer Look at the Numbers
The latest ADP National Employment Report® has just dropped, and it’s painting a picture of a job market that’s slowing down—but here’s where it gets interesting: wages are holding steady. In January, private sector employment inched up by just 22,000 jobs, a far cry from the robust growth we’ve seen in previous years. But wages? They’re up 4.5% year-over-year, a sign that even as hiring cools, paychecks are still growing. And this is the part most people miss: while job creation has been on a downward trend for three years, wage growth remains stable, raising questions about the future of the labor market.
Produced by ADP Research in collaboration with the Stanford Digital Economy Lab, this report is no ordinary snapshot. It’s based on the anonymized payroll data of over 26 million private-sector employees in the U.S., offering a granular and high-frequency view of the job market. ADP’s Pay Insights, which tracks over 15 million pay changes monthly, adds another layer of depth, giving us a comprehensive look at both employment and compensation trends.
Dr. Nela Richardson, ADP’s chief economist, puts it bluntly: ‘Job creation took a step back in 2025, with private employers adding just 398,000 jobs, down sharply from 771,000 in 2024.’ But she also highlights the silver lining: ‘Wage growth has remained stable, even as hiring slows.’ This raises a thought-provoking question: Is the job market softening, or are we simply entering a new phase where wage growth outpaces hiring?
January 2026 Report Highlights
For a deeper dive, check out the interactive charts and full report at www.adpemploymentreport.com.
Jobs Report
January was a lackluster month for hiring, but not all sectors were created equal. The education and health services sector stood out, adding a whopping 74,000 jobs. Meanwhile, manufacturing continued its decline, losing jobs for the 10th consecutive month since March 2024. Professional and business services also took a hit, shedding 57,000 jobs. Large employers led the slowdown, cutting 18,000 positions.
Regional Breakdown:
- Northeast: +17,000 jobs (New England: +6,000; Mid-Atlantic: +11,000)
- Midwest: +25,000 jobs (East North Central: +8,000; West North Central: +17,000)
- South: -10,000 jobs (South Atlantic: -76,000; East South Central: +19,000; West South Central: +47,000)
- West: -11,000 jobs (Mountain: +11,000; Pacific: -22,000)
By Establishment Size:
- Small (1-49 employees): Net change of 0 (1-19: +30,000; 20-49: -30,000)
- Medium (50-499 employees): +41,000 jobs
- Large (500+ employees): -18,000 jobs
Pay Insights
Wages for job-stayers rose 4.5% year-over-year in January, holding steady from previous months. Job-changers, however, saw their pay growth slow to 6.4%, down from 6.6%. But here’s where it gets controversial: Are employers prioritizing retaining existing talent over attracting new hires? The data suggests a shift in focus, but what does this mean for job mobility and career advancement?
Median Annual Pay Growth by Industry (Job-Stayers):
- Goods-producing: 4.5% (Natural resources/mining: 4.3%; Construction: 4.7%; Manufacturing: 5.0%)
- Service-providing: 4.4% (Education/health services: 4.4%; Financial activities: 5.2%; Leisure/hospitality: 4.7%)
By Firm Size (Job-Stayers):
- Small firms (1-49 employees): 3.3% (1-19: 2.5%; 20-49: 4.1%)
- Medium firms (50-499 employees): 4.75%
- Large firms (500+ employees): 5.0%
For a detailed breakdown by state, gender, and age, visit Pay Insights.
Revisions and Methodology Notes:
The December job gains were revised downward from 41,000 to 37,000. The January 2026 report includes ADP’s annual benchmark revision, reweighting data to align with the Quarterly Census of Employment and Wages (QCEW) through March 2025. Starting this month, the report will also incorporate the latest QCEW data for added accuracy.
What’s Next?
The February 2026 ADP National Employment Report will be released on March 4, 2026, at 8:15 a.m. ET. Mark your calendars!
About ADP Research
ADP Research is on a mission to make the future of work more productive through data-driven insights. Our finely tuned data and unique perspective empower companies, workers, and policymakers to make informed decisions that shape workplaces globally.
About ADP (NASDAQ: ADP)
For over 75 years, ADP has been a pioneer in HR and payroll solutions, helping businesses of all sizes navigate challenges and drive success. With a presence in 140+ countries and serving over 1.1 million clients, ADP is committed to designing solutions that put people first. Learn more at ADP.com.
Final Thought: As the job market evolves, one thing is clear: the relationship between hiring and wages is more complex than ever. Are we witnessing a structural shift, or is this just a temporary blip? Let us know your thoughts in the comments—we’d love to hear your take on where the labor market is headed!
