According to the January ADP® National Employment Report, prepared by ADP Research in collaboration with Stanford University’s Digital Economy Lab (Stanford Lab), the number of jobs in the private sector increased by 183,000 jobs in January, and the annual wage increased 4.7 percent year-on-year. The ADP National Employment Report is an independent measure and a high-frequency view of the labor market in the private sector based on actual and anonymous salary data for more than 25 million employees in the United States.
The Jobs and Wage Insights report uses aggregated and anonymous accurate payroll data from ADP to provide a representative picture of the private sector labor market. The report shows the overall change in private hiring in the current month, and weekly jobs data from the previous month. Since ADP base databases constantly updated, the report provides a high-frequency and almost real-time measure of employment in the United States. This metric reflects the number of employees on ADP customer payrolls to provide a richer understanding of the labor market. Starting January 2025.
ADP’s Pay Insights metric captures nearly 14.8 million observations of individual pay changes each month, up from nearly 10 million when it launched.
Nella Richardson, chief economist at ADP, said, “We had a strong start to 2025 but it hid a dualism in the labor market.” “Consumer-facing industries pushed employment, while job growth was weaker in business services and production.”
The total number of jobs added in December was revised from 122,000 to 176,000. The January 2025 report reflects the planned annual review of the National Employment Report from ADP.
The data series has been reweighted to conform to the Quarterly Employment and Wage Census (QCEW) standard data until March 2024. In addition, this amendment includes an improved classification model, including updated geographic and industrial classifications.
Improvements to the February ADP Pay Insights report
The February 2025 ADP National Employment Report will be released on March 5, 2025. ADP Pay Insights methodology improvements ADP Pay Insights uses employer payroll data to track the wages and salaries of individual workers and calculates changes in wages year-on-year. Starting in January 2025, the Pay Insights database will include Nearly 22.3 million workers, up from about 14 million.
This expanded sample size is the result of improved industry code matching and an improved computational model. Of this larger sample, Pay Insights can make more than 14.8 million pay change observations each month, up from about 10 million when it launched.
The monthly sample of people who stayed in their jobs – those unique pairs between workers and employers observed in both this month and the previous 12 months – has grown from more than 7.7 million to more than 13.8 million.
The sample of people who have changed jobs – those individuals whose current jobs are different from those they held 12 months ago – has grown from about 310,000 to more than a million.
With this change, the Pay Insights data series has also been expanded to start in December 2018, from October 2019.
The ADP National Employment Report is an independent measure of the change in private employment in the United States and wages derived from actual and anonymized salary data of client companies served by ADP, A leading provider of human capital management solutions. The report is produced by ADP Research in collaboration with Stanford University’s Digital Economy Laboratory.
ADP’s National Employment Report is widely distributed to the public every month. Free of charge, as part of the company’s commitment to providing deeper insights into the U.S. labor market and providing businesses and governments with a source of reliable and valuable information.
The Importance of ADP Employment Change in Assessing the U.S. Economy
The change in nonfarm employment is important for several reasons when assessing the U.S. economy:
Economic Health Index: Provides an immediate picture of job creation, reflecting the overall health of the economy. A strong increase indicates economic expansion, while a decline may indicate contraction.
Consumer spending: Employment levels directly affect consumer spending, which is the main driver of economic growth. More jobs typically lead to increased disposable income and spending, boosting economic activity.
Labor market dynamics: The report highlights trends in various sectors. Helping analysts understand where growth is occurring or where sectors may struggle. This can help with investment decisions and economic forecasts.
Inflationary pressures: Changes in employment can indicate potential inflationary pressures. If employment rises rapidly, it could lead to wage increases, contributing to inflation, prompting the Fed to adjust monetary policy.
Policy decision-making: Policymakers, including the Fed, closely monitor this data to guide decisions on interest rates and other economic policies. Strong employment figures could tighten monetary policy, while weak figures could prompt stimulus measures.
Market sentiment: The change in nonfarm employment affects investor sentiment and can drive market reactions across stocks, bonds, and currencies. Positive data can boost confidence, while negative data can lead to market volatility.
Long-term trends: Analyzing data over time helps identify long-term trends in the labor market. Such as shifts in employment patterns, labor force participation, and the impact of economic policies.
Nonfarm pay rolling is a crucial indicator that provides insights into the labor market. Economic growth, inflation, and overall economic stability, making it essential for analysts, investors, and policymakers.
