ADP December Employment Report: Job Growth Falls Short of Expectations
Service Sector and Small Business Hiring Lead Gains
Private sector employment in the United States returned to growth last month after a one-month decline. Although the increase fell short of market expectations, there are still only limited signs that the labor market is deteriorating rapidly.
A job posting is displayed at a retail store in Arlington Heights, Illinois, USA. Photo by AP Yonhap News
On January 7 (local time), ADP, a U.S. private labor market research firm, released its employment report showing that 41,000 new jobs were added in the private sector in December 2025 compared to the previous month.
In November, private sector jobs had decreased by 29,000, but returned to growth after just one month. However, the scale of the increase was below the Dow Jones forecast of 48,000, indicating that the pace of job recovery is slower than expected.
The growth in employment was mainly driven by the service industry. The education and health services sector added 39,000 jobs, while trade, transportation, and utilities saw an increase of 11,000 jobs. Leisure and hospitality added 24,000 jobs, finance 6,000 jobs, and other services 5,000 jobs. In contrast, professional and business services decreased by 29,000 jobs, and the information sector declined by 12,000 jobs, partially offsetting the overall gains. Manufacturing also saw a reduction of 5,000 jobs.
The increase in jobs last month was primarily concentrated among small and medium-sized businesses with fewer than 500 employees. These businesses, which had been reducing their workforce in recent months, resumed hiring and added 43,000 jobs, while large companies with 500 or more employees only increased employment by 2,000 jobs.
Wage growth remained relatively stable. For workers who stayed at their jobs for one year, wages rose by 4.4% year-on-year, maintaining the same level as the previous month. For workers who changed jobs, wage growth was 6.6%, up 0.3 percentage points from the previous month.
The market is now focusing on the U.S. Department of Labor’s Bureau of Labor Statistics (BLS) December employment report, which reflects both private and public sector employment and provides a comprehensive view of the labor market’s overall health. According to Dow Jones forecasts, nonfarm payrolls are expected to increase by 73,000 in December, surpassing November’s 64,000. The unemployment rate is expected to fall by 0.1 percentage points from the previous month to 4.5%. The report will be released in two days, on January 9.
Nela Richardson, Chief Economist at ADP, explained, “While large companies reduced hiring, small businesses increased year-end hiring, showing a recovery from November’s job losses.”
Last year, the labor market showed gradual signs of slowing, prompting the U.S. Federal Reserve (Fed) to prioritize employment stability in its policy decisions, lowering the benchmark interest rate three times in a row since September for a total reduction of 0.75 percentage points. The Fed is focusing on balancing the risks between inflation and employment as both labor market weakness and high inflation persist. Amid ongoing concerns about a cooling labor market, most forecasts predict that employment growth will continue to slow this year.
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