"Little Non-Farm" unexpectedly booms! The U.S. added 183,000 jobs in January ADP, with December data significantly revised upward

The ADP employment data, known as the "little non-farm," significantly exceeded expectations in January, indicating that the U.S. job market remains strong, further constraining the Federal Reserve's room for interest rate cuts.

On Wednesday, the employment data processing company ADP reported that U.S. employment increased by 183,000 in January, marking the highest record since October last year and far surpassing the market expectation of 150,000. Meanwhile, the data for December was significantly revised up from 122,000 to 176,000.

After the data was released, market fluctuations were minimal. However, the report again confirmed that the U.S. labor market is still expanding at a healthy pace. Although the reduction in job vacancies and the slowdown in wage growth indicate that the labor market is undergoing some adjustments, employers are still hiring, and layoffs remain relatively low.

What will be the Federal Reserve's next move? Focus on this Friday's non-farm report

The Federal Reserve is closely monitoring the dynamics of the labor market to assess the path for interest rate cuts later this year.

The rapid rise in the unemployment rate last summer was a key factor in the Federal Reserve's decision to cut rates by a full percentage point in 2024. However, since then, the U.S. job market has shown a strong resurgence, with Federal Reserve Chairman Jerome Powell describing it as "quite stable" last week.

At the same time, there remains significant uncertainty surrounding Trump's tariff policy, casting a shadow over the Federal Reserve's future interest rate path.

Notably, the non-farm employment report officially released by the U.S. Bureau of Labor Statistics will be published this Friday following the ADP report. Unlike ADP, this report's employment survey covers government sectors. The market generally expects that U.S. non-farm employment will increase by 169,000 in January, with the unemployment rate remaining at 4.1%.

The two employment reports sometimes "contradict each other." However, ADP stated that the sample size for its compensation measurement continues to expand, currently reaching 14.8 million, while the number of respondents at the time of release was only nearly 10 million.

The goods-producing sector faces the worst unemployment situation in two years, while service sector employment surges

Despite the overall ADP data exceeding expectations, there were significant disparities in employment across different industries.

By industry: In January, employment in goods producers decreased by 6,000, marking the worst unemployment situation since November 2023, while employment in the service sector surged by 190,000, the highest level since July 2023.

Specifically:

Trade, transportation, and utilities saw the most new jobs added, with an increase of 56,000;

Leisure and hospitality followed closely, adding 54,000 jobs;

Education and health services added 20,000 jobs

Manufacturing jobs hit hard again, with a reduction of 13,000 positions……

In this employment report, ADP Chief Economist Nela Richardson wrote:

We started strong in 2025, but the divergence in the labor market has been masked. Consumer-facing industries drove hiring, while job growth in business services and manufacturing sectors was weak