Private sector employers added 183,000 jobs in January, payroll giant ADP
The service-providing sector accounted for the bulk of the job gains, at 190,000 jobs, including 14,000 jobs added in professional and business services such as accounting and tax preparation, along with 13,000 in financial activities such as banking, and 54,000 in the leisure and hospitality sector. However, that was offset by losses in the goods-producing sector, which lost a total of 6,000 jobs, with a loss of 13,000 jobs in manufacturing partially offset by gains of 4,000 jobs in the natural resources and mining sector and 3,000 jobs in construction.
The decision by Waffle House to
"A consumer obviously is disappointed about the price of eggs, but is not slowing spending when it comes to entertainment or restaurants, maybe not getting an omelet, but going for the waffles instead, but still showing up when it comes to this sector," said ADP chief economist Nela Richardson during a conference call Wednesday with reporters. "Where we've seen a little bit of a slowdown over the last few months is more in business services. Professional and business services at 14,000 was not a highlight or a strong point since 2024, and a little bit of a slowdown in financial activities as well. We're going to be really watchful to see the places of strength as we move through the year. As long as the consumer, though, is in good shape, I think we're going to see hiring follow the consumer."
Small businesses added 39,000 jobs in January, including 23,000 in businesses with between one and 19 employees and 16,000 in businesses with between 20 and 49 employees. Medium-size establishments added 92,000 jobs, including 53,000 in companies with between 50 and 249 employees and 39,000 in organizations with between 250 and 499 employees. Large establishments with 500 employees or more added 69,000 jobs in January.
Year-over-year pay growth was 4.7% for people who stayed in their jobs, while pay growth for those who changed jobs was 6.8%. In professional and business services, the rate of pay growth was 4.6% for job stayers.
"There's still a premium to changing jobs, but that premium has also been steady," said Richardson. "It's about 2.1% right now. We've seen it be as high as 7 or 9%. There isn't as much benefit from job switching as there's been in the past."
She noted that the U.S. Bureau of Labor Statistics' latest JOLTS report, or
"Quit rates are lower than they've been even before the pandemic," said Richardson. "We have a super low quit rate now compared to where it was during the Great Resignation."
ADP also dug into the numbers for Los Angeles in the wake of the devastating wildfires last month. Richardson noted the region accounts for 3% of the U.S. workforce and 25% of California employment. ADP found a lower amount of hours for the three-week time horizon around the fires compared to a year ago. In the week of January 5, there was a 5% to 10% drop in paychecks in the areas most affected by the fires, but since three weeks ago, the paychecks have mostly recovered.
"What's interesting is where we saw the drop in labor market activity," said Richardson. "It was really in manufacturing for the most part. We actually saw a boost in hours in leisure and hospitality. That makes sense if you think about the amount of people who were displaced during the fires, staying at hotels, maybe ordering more takeout. During that time, we saw a boost in hiring in that sector for the affected region."
