ROSELAND, N.J. – The U.S. private sector capped off 2025 with a modest hiring recovery, adding 41,000 jobs in December, according to the latest ADP National Employment Report. The figures represent a bounce-back from November’s job losses, driven largely by small businesses and the service sector.
The report, developed by the ADP Research Institute in collaboration with the Stanford Digital Economy Lab, also revealed that annual pay growth remained stable at 4.4% year-over-year.
Small Businesses Fuel the Recovery
The month’s gains were characterized by a notable “tug-of-war” between different company sizes. Small establishments (1–49 employees) led the charge, rebounding from a difficult November to drive end-of-year hiring. In contrast, large employers (500+ employees) showed signs of a pullback, reducing their headcounts as the year came to a close.
“Small establishments recovered from November job losses with positive end-of-year hiring, even as large employers pulled back,” said Dr. Nela Richardson, chief economist at ADP.
Sector Performance: Services vs. Goods
The service-providing sector was the primary engine of growth, contributing a net 44,000 jobs. The gains were concentrated in:
- Education and Health Services: +39,000 jobs
- Leisure and Hospitality: +24,000 jobs
- Trade, Transportation, and Utilities: +11,000 jobs
However, these gains were partially offset by significant losses in Professional and Business Services, which shed 29,000 positions, and the Information sector, which declined by 12,000.
The goods-producing sector saw a slight contraction overall, losing 3,000 jobs. While construction and natural resources saw minor gains, the manufacturing sector continued to struggle, losing 5,000 jobs in December.
Regional Disparity: South Rises, West Slides
Geographically, the labor market showed sharp divides:
- The South led the nation with 54,000 new jobs.
- The Northeast followed with a gain of 40,000.
- The West saw a significant decline, shedding 61,000 jobs, driven almost entirely by losses in the Pacific region.
Pay Growth Remains Consistent
While hiring was modest, wage growth remained a steady fixture of the report. The 4.4% year-over-year increase in pay suggests that while the pace of hiring may be fluctuating, the pressure on wages has not yet seen a dramatic cooling.
Looking Ahead
The December report suggests a stabilizing labor market after a period of volatility in late 2025. With small businesses regaining their footing and the service sector remaining resilient, economists will be watching closely to see if this modest momentum carries into the first quarter of 2026.