Private-Sector Employment Growth Slows in January with 22,000 New Jobs

The private-sector job market in the United States saw significant slowing in January 2023. According to a report from ADP, employers added only 22,000 new jobs for the month, falling short of the anticipated 45,000. This is a stark decline compared to December’s adjusted gain of 37,000 jobs.

Key Insights from ADP’s January Report

• Private sector added 22,000 jobs in January 2023.
• The job growth rate is approximately half of economists’ expectations.
• Employment figures for December were revised down from 41,000 to 37,000.

Industries Contributing to Job Growth

The education and health services sector led job creation in January, contributing an estimated 74,000 new positions. This growth is largely attributed to the increasing demand for healthcare services due to an aging population.

Sectors Facing Job Losses

• The professional and business services sector lost 57,000 jobs in January, the largest reduction since August 2024.
• Manufacturing continued its decline, shedding 8,000 jobs, marking the ongoing struggles of this sector.

Economic Implications

Experts emphasize that the concentrated job growth in a limited number of sectors reflects a weakening labor market. Nela Richardson, chief economist at ADP, noted that there is a narrowed pathway to job creation, which has resulted in slower overall economic growth.

Elizabeth Renter from NerdWallet pointed out that this situation leads to fewer opportunities for workers, hindering professional development and salary increases. The labor market dynamics have shifted to a “low-hire, low-fire” environment, affecting both current employees and those seeking new jobs.

Wage Growth Trends

Despite the minimal job additions, wage growth has demonstrated stability. In January, annual pay growth for individuals who remained in their positions was reported at 4.5%, which exceeds pre-pandemic levels. However, pay increases for job changers have slowed slightly to 6.4% from 6.6% in the previous month.

Future Reporting and Analysis

The delay of the official jobs report has stemmed from a brief government shutdown. The Bureau of Labor Statistics has announced a new schedule for delayed reports:

As we await further data, experts underline that reports like ADP’s are vital for understanding job market trends between official updates. However, they are not exhaustive and should be viewed as part of a broader picture of economic conditions.