ADP reported on Wednesday that private job growth fell sharply in January, which could be a sign that the U.S. labor market will slow this year.
The payroll processor added 107,000 workers in the first month of 2024, according to the company, down from a downward revision of 158,000 in December and below a Dow Jones estimate of 150,000.
Only one industry — information services (-9,000) — reported a decline, but hiring was slow across almost all industries.
Leisure and hospitality saw the largest gains, adding 28,000 workers, trade, transport and utilities added 23,000 workers and construction added 22,000 workers. Service-providing companies provide 77,000 jobs, with goods producers providing the remainder.
The report comes two days ahead of the Labor Department’s nonfarm payrolls report, which predicts a gain of 185,000 jobs, compared with a gain of 216,000 in December. While the ADP data can provide a barometer for private sector hiring, the two reports tend to differ, with the ADP data often being lower than the Labor Department’s data.
In terms of wage growth, ADP reported an annual increase of 5.2%, which is higher than the government’s measure of average hourly earnings.
“Inflation-adjusted wages have improved over the past six months, and the U.S. and global economies appear to be heading for a soft landing,” said ADP chief economist Nela Richardson.
Medium-sized businesses with 50 to 499 employees led job creation, adding 61,000 jobs. Small businesses only added 25,000 people.
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