Private Sector Employment Rose by 41,000 in December, Below Expectations, ADP Reports, Posing a Test for Friday's Nonfarm Payrolls

Private sector job creation turned positive in December but came in at a softer pace than expected, according to the ADP National Employment Report released Wednesday. U.S. private employers added 41,000 jobs for the month, reversing a revised loss of 29,000 in November, but falling short of the Dow Jones consensus estimate of 48,000.

The rebound offered a modestly constructive signal for a labor market that had struggled into year-end 2025, with private payrolls declining in three of the four months prior to December. Hiring was driven entirely by service-providing industries, while goods-producing sectors continued to shed jobs.

Education and health services led gains with 39,000 new positions, followed by leisure and hospitality with 24,000. Trade, transportation and utilities added 11,000 jobs, while financial services increased by 6,000. These gains were partially offset by losses of 29,000 in professional and business services and 12,000 in information services. Goods-producing industries lost a net 3,000 jobs, largely due to a 5,000 decline in manufacturing, despite small increases in construction and natural resources.

Regionally, job growth was strongest in the South and Northeast, which added 54,000 and 40,000 jobs respectively. The Midwest saw a modest gain of 9,000, while the West posted a sharp decline of 61,000, led by losses in the Pacific region.

Hiring strength was concentrated among smaller and mid-sized firms. Companies with fewer than 500 employees accounted for nearly all of the gains, while large firms added just 2,000 jobs. "Small establishments recovered from November job losses with positive end-of-year hiring, even as large employers pulled back," said ADP Chief Economist Nela Richardson.

Wage growth remained contained. Annual pay increases for job-stayers held steady at 4.4% in December, unchanged from November. Job-changers saw wage growth accelerate to 6.6%, up 0.3 percentage point from the prior month, suggesting continued but easing labor market tightness.

The ADP report, based on anonymized payroll data from more than 26 million private-sector employees, comes two days ahead of the closely watched nonfarm payrolls release from the Bureau of Labor Statistics.

Economists surveyed by Dow Jones expect Friday's report to show a gain of 73,000 jobs, up from 64,000 in November, with the unemployment rate edging down to 4.5%. With December hiring undershooting expectations in the ADP data, the official jobs report now faces a higher bar to confirm a reacceleration in labor market momentum.