Private sector employment increased by 107,000 jobs in January, with annual pay up by 5.2% year-over-year, according to the ADP National Employment Report.
During the first month of 2024, companies expanded their payrolls by 107,000 workers, a significant drop from the downwardly revised figure of 158,000 in December and falling short of the Dow Jones estimate, which projected an increase of 150,000.
While only one sector, information services, reported a decline of 9,000 jobs, the pace of hiring decelerated across nearly all industries. The leisure and hospitality sector saw the most substantial increase, with an additional 28,000 workers, followed by trade, transportation, and utilities, which added 23,000 jobs, and construction, with an increase of 22,000 positions. Service-providing companies accounted for 77,000 jobs, with goods-producing industries contributing the remaining positions.
This ADP release precedes the Labor Department's nonfarm payrolls report by two days. The Labor Department's report is expected to reveal job growth of 185,000, a decrease from the 216,000 jobs added in December. While ADP data can serve as a gauge for private sector hiring, it often differs from the Labor Department's numbers, with ADP frequently reporting lower figures.
Regarding wage gains, ADP disclosed a 5.2% annual increase, surpassing the government's measure of average hourly earnings.
"Wages adjusted for inflation have improved over the past six months, and the economy looks like it's headed toward a soft landing in the U.S. and globally," ADP Chief Economist Nela Richardson said.
Among different establishment sizes, midsize businesses -- employing between 50 and 499 workers -- led job creation by adding 61,000 positions. Small businesses added only 25,000 positions in January.
