After a disappointing November, U.S. private-sector hiring found its footing again in December—but just barely. According to the December ADP National Employment Report®, private employers added 41,000 jobs, signaling a modest rebound rather than a renewed surge. Pay growth held steady, reinforcing the idea that the labor market is cooling, not collapsing.
The report, produced by ADP Research in collaboration with the Stanford Digital Economy Lab, draws on anonymized payroll data from more than 26 million private-sector employees, making it one of the most granular and timely views of employment trends available. ADP’s Pay Insights layer adds another dimension, tracking more than 15 million individual pay change observations each month.
Taken together, the data paints a clear picture of a labor market entering 2026 in a state of cautious balance—resilient in some areas, fragile in others.
A Modest Rebound After November’s Slide
December’s job gains follow a revised November loss of 29,000 jobs, originally reported as a 32,000 decline. The rebound was driven primarily by education and health services and leisure and hospitality, two sectors that have repeatedly propped up employment during periods of broader uncertainty.
“Small establishments recovered from November job losses with positive end-of-year hiring, even as large employers pulled back,” said Dr. Nela Richardson, ADP’s chief economist.
That divergence by employer size is one of the most telling signals in the report—and one that HR and workforce leaders should not ignore.
Industry Breakdown: Services Carry the Load
December’s gains were entirely powered by the service sector.
Service-providing industries added 44,000 jobs, offsetting a 3,000-job decline in goods-producing industries.
The standout performers:
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Education and Health Services: +39,000
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Leisure and Hospitality: +24,000
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Trade, Transportation, and Utilities: +11,000
These sectors continue to benefit from structural demand—healthcare staffing shortages, steady consumer services demand, and seasonal travel and retail activity.
But not all services shared the upside. Professional and business services shed 29,000 jobs, while information services fell by 12,000. Those declines align with ongoing pullbacks in tech, consulting, and white-collar services—areas still digesting overhiring from earlier cycles and increased automation.
On the goods side, manufacturing lost 5,000 jobs, while construction and natural resources posted marginal gains. Manufacturing’s softness reflects weak global demand, high interest rates, and continued supply chain normalization rather than expansion.
Regional Swings Reveal a Split Economy
Geographically, December was anything but uniform.
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South: +54,000 jobs
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Northeast: +40,000 jobs
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Midwest: +9,000 jobs
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West: -61,000 jobs
The South Atlantic and Mid-Atlantic regions were particularly strong, while the Pacific region alone lost 59,000 jobs. The West’s decline highlights the continued employment reset underway in tech-heavy and high-cost markets, where layoffs, hiring freezes, and relocations remain common.
Meanwhile, growth in the South and parts of the Northeast reflects population shifts, lower operating costs, and continued expansion in healthcare, logistics, and consumer-facing services.
Employer Size Tells the Real Story
The most revealing dimension of the report may be establishment size.
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Small establishments (1–49 employees): +9,000 jobs
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Medium establishments (50–499 employees): +34,000 jobs
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Large establishments (500+ employees): +2,000 jobs
Small businesses showed resilience, recovering from November’s losses with modest hiring. Medium-sized employers were the clear engine of December’s growth, accounting for more than 80% of new jobs.
Large employers, by contrast, barely moved.
This pattern reinforces what many HR leaders are already seeing: large organizations remain cautious, focused on productivity, automation, and cost control rather than headcount expansion. Midmarket firms, however, are selectively hiring to meet demand, often in operational and customer-facing roles.
Pay Growth: Stable, Slower, and Still Elevated
If hiring was muted, pay growth was steady.
Job-stayer pay rose 4.4% year over year in December, unchanged from November. While that’s well below the peaks of 2022, it remains historically elevated—suggesting wage pressure hasn’t disappeared, even as hiring slows.
For job-changers, pay growth accelerated to 6.6%, up from 6.3% in November. That gap between stayers and switchers continues to incentivize mobility, especially in high-demand roles.
By industry, job-stayer pay growth remained relatively consistent:
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Financial activities: 5.2%
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Manufacturing: 4.8%
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Leisure and hospitality: 4.5%
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Education and health services: 4.3%
Firm size also mattered. Workers at large firms (500+ employees) saw the strongest pay growth at 4.8%, compared with just 2.3% at the smallest firms (1–19 employees). That spread highlights the growing compensation gap between well-capitalized enterprises and smaller employers still managing margin pressure.
What the Data Really Signals for 2026
December’s report does not point to a labor market reaccelerating. Nor does it suggest a sharp downturn. Instead, it reflects a market that has recalibrated after years of extremes.
Hiring is happening—but selectively. Wage growth is cooling—but not collapsing. Employers are cautious, but not frozen.
For HR and talent leaders, the implications are clear:
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Retention still matters. Pay growth for job-stayers remains elevated, and replacing talent is still costly.
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Mobility remains a risk. Job-changers continue to command meaningful pay premiums.
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Workforce planning must be granular. Industry, region, and firm size differences are widening—not narrowing.
The data also underscores a shift in leverage. Employees no longer have the blanket bargaining power of the post-pandemic boom, but employers haven’t fully regained control either. The balance is closer to neutral—and that equilibrium may define early 2026.
Looking Ahead
The January 2026 ADP National Employment Report will be released on February 4, 2026, and will offer the first real signal of how employers are thinking about headcount in the new year.
For now, December closes 2025 with a labor market that stabilized just enough to avoid a stumble—but not enough to inspire confidence of a breakout.
In today’s economy, that may be the most realistic outcome of all.
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