ADP's January Jobs Report Points To Labor Market Downtrend in 2024

ADP finds wage gains are outpacing hiring in the U.S. labor market, suggesting the labor market cooled significantly in January as employers adjust for inflation.

January’s private payroll growth underperformed economic predictions, with revised data from ADP suggesting a looming, albeit gradual, downtrend in the labor market.

CNBC reports that in January 2024, U.S. companies added 107,000 jobs, which is a decrease from December’s 158,000 jobs. This growth was also lower than the 150,000 jobs predicted by Dow Jones.

Information services is reported to be the only sector that experienced a decline in employment, with the sector losing 9,000 jobs. Other sectors gained jobs at lower rates than recently. The leisure and hospitality sector is reported to have gained the most with 28,000 jobs added.

ADP’s report arrives two days ahead of the Labor Department’s nonfarm payrolls report. The labor department’s report is expected to show growth of 185,000 jobs — compared to 216,000 jobs experienced in December, CNBC reports.

The findings also show a 5.2% annual increase in wages — as more employers adjust wages for inflation.

“Progress on inflation has brightened the economic picture despite a slowdown in hiring and pay,” said Chief Economist of ADP Nela Richardson in its January report. “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.”