The U.S. job market continues to languish, giving enough reason to the Federal Reserve to stay dovish on monetary policy.
Job Growth Disappoints: The U.S. private sector added 22,000 jobs in January, fewer than the downwardly revised 37,000 jobs added in December, according to ADP’s private payrolls report produced in collaboration with the Stanford Digital Economy Lab. Economists, on average, expected job gains of 46,000 for the month compared with the originally reported 41,000 private payroll growth for December.
Source: ADP
ADP Chief Economist Dr. Nela Richardson said, “Job creation took a step back in 2025, with private employers adding 398,000 jobs, down from 771,000 in 2024. While we've seen a continuous and dramatic slowdown in job creation for the past three years, wage growth has remained stable.”
Pay was up 4.5% year over year, little changed from December.
The Sore Spots: The manufacturing sector lost 8,000 jobs in January, extending its job-losing streak seen since March 2024, and professional/business services lost 57,000 jobs. On the other hand, education & health services and financial activities saw payroll gains of 74,000 and 14,000, respectively. About 9,000 construction jobs were created during the month.
Read-across for NFP report: The Bureau of Labor Statistics would be out with its monthly non-farm payrolls (NFP) data on Friday. The report’s release could be delayed by a day or two due to the partial government shutdown that was in effect on Monday and Tuesday. The consensus models job gains of 67,000 for January compared to the 50,000 jobs added in the previous month.
The BLS is set to incorporate the final benchmark revision in the January report. The preliminary benchmark revision published in September showed a 911,000 downward revision to the numbers reported for the 12 months ended March 2025.
Takeaways For Futures Traders: Anemic payrolls gain supports a dovish Fed stance, keeping the likelihood of pauses/rate cuts high. Low. Therefore, it pays to go long on Treasury futures (ZN/ZB) and short on dollar index futures (DX), provided the NFP report confirms the labor market softness.
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