US private payrolls increase well below expectation-ADP

The ADP private sector payrolls report, released on Wednesday, showed that private payrolls increased well below expectations in January, with job losses in the professional and business services and manufacturing sectors, being mainly behind last month’s drop.

Private sector employment increased by 22,000 jobs in January, compared to downwardly revised 37,000 increases in December (down from 41,000) and strongly undershooting 46,000 consensus.

Sectors with the biggest employment gains last month were education, health services and construction, with employment rise also registered in trade, transportation, leisure and hospitality sectors.

The ADP report precedes more comprehensive and closely watched nonfarm payrolls report for January, which was due for release on Friday, but has been delayed due to the partial shutdown of the federal government.

According to available data, economists expect the US labor sector to remain in “low-hire, low-fire” state, caused mainly by import tariffs and the rise of artificial intelligence.

On the other hand, Federal Reserve Chair Jerome Powell showed more optimism by expecting conditions in labor sector may be stabilizing after a period of gradual softening.