Private sector employment surged by 183,000 jobs in January, exceeding economists' forecasts and signaling a strong labor market.
Annual pay grew by 4.7% for employees who remained with their current employer (referred to as "job-stayers").
Employees who chose to job hop saw a 6.8% increase in their earnings, according to a ADP National Employment Report released Wednesday.
ADP's chief economist Nela Richardson says consumer-facing industries like education and health are thriving while business services jobs lagged.
"We had a strong start to 2025 but it masked a dichotomy in the labor market," Richardson said. "Consumer-facing industries drove hiring, while job growth was weaker in business services and production."
Service-providing industries led hiring with 190,000 new jobs, primarily in trade, transportation, and utilities with 56,000 added jobs.
The goods-making sector saw a net loss of 6,000 jobs with manufacturing shedding 13,000 positions.
The majority of new jobs, 70,000, were added in West Coast states.
The northeast region only added 22,000 jobs.
Small, medium, and large businesses all saw employment gains.
The Bureau of Labor Statistics forecasted more job uncertainty in 2025 in its final job report for 2024.
Companies slowed down their hiring in the last month of the year according to a previous ADP jobs report.
The strong numbers put future interest rate cuts by the Federal Reserve in jeopardy as favorable numbers indicated a recovering economy.
The unemployment rate dropped to 4.1%, a slight difference from an anticipated 4.2%.
