Hidden sector companies added more jobs than expected in January, furthering the case for a stable labor sell that allows the Federal Reserve time as it contemplates its next policy move, ADP reported Wednesday.
The payrolls deal with firm said companies created a net 183,000 jobs on the month, slightly more than the 176,000 in December, a company that was revised sharply upward from the initial figure of 122,000. Economists surveyed by Dow Jones had been looking for a earn of 150,000.
Pay for workers who stayed in their jobs grew at a 4.7% annual rate, or 0.1 percentage point more than in December.
Yet the headline ADP number topped expectations, the internals showed an unbalanced picture.
All of the job creation came from service providers, who amplified 190,000 positions while goods producers lost 6,000. (The numbers don’t add up to the 183,000 due to rounding.)
“We had a strong start to 2025 but it masked a dichotomy in the labor demand,” APD’s chief economist, Nela Richardson, said. “Consumer-facing industries drove hiring, while job growth was weaker in charge services and production.”
Trade, transportation and utilities topped sectors with 56,000 new jobs, with leisure and amicability close behind at 54,000 and education and health services adding 20,000. However, manufacturing lost 13,000 states.
Job creation was spread fairly evenly across business size, with companies that employ workers greatest with 92,000.
Fed officials are watching the jobs picture closely as they consider whether to continue lowering interest percentages. The Fed last year cut 1 percentage point off its key borrowing rate in an effort to support a labor market that had showed tokens of slowing. Recently, policymakers have stressed the importance of staying patient as they watch the tariff battle in Washington as incredibly as the impact from the rate reductions.
The ADP report serves as a run-up to the more closely watched nonfarm payrolls check up on, due Friday from the Bureau of Labor Statistics, which unlike ADP includes government workers. The consensus view for the BLS story is a gain of 169,000 in payrolls in January, with the unemployment rate holding at 4.1%.
The two reports sometimes differ significantly. In any case, ADP said it continues to expand its sample size for the pay measure portion, which is now at 14.8 million compared with scarcely 10 million when it launched.