The latest report from ADP reveals a significant gain in private sector jobs for January 2025, surpassing expectations. According to ADP, the economy added 183,000 new jobs, a slight increase from December's total of 176,000. This figure outpaced the anticipated 169,000 job additions projected by economists for the Bureau of Labor Statistics (BLS) report. The unemployment rate is expected to remain steady at 4.1%.
ADP's report highlights that service providers led job creation with an impressive addition of 190,000 positions, while goods producers saw a decrease of 6,000 jobs. Notably, the sample size for ADP's pay measure portion has expanded to 14.8 million, providing a broader insight into wage trends.
The ADP findings serve as a precursor to the highly anticipated nonfarm payrolls report from the BLS, which is due on Friday. Unlike ADP's data, the BLS report includes government workers. Despite this difference, both reports offer valuable insights into labor market trends.
Trade, transportation, and utilities sectors emerged as top contributors with 56,000 new jobs. Meanwhile, leisure and hospitality sectors added 54,000 positions, and education and health services contributed 20,000 new jobs. In contrast, the manufacturing sector faced a downturn, losing 13,000 positions in January.
In terms of wages, workers who remained in their jobs experienced a pay increase at an annual rate of 4.7%, which is slightly higher by 0.1 percentage points than the growth observed in December.
"We had a strong start to 2025 but it masked a dichotomy in the labor market," stated ADP chief economist Nela Richardson.
This dichotomy highlights the varying fortunes across different sectors, underscoring the complexity of current economic dynamics.