ADP reported a better than expected 183,000 jobs in January, but small business trends are unsettling.
The ADP® National Employment Report for January 2025 shows Private employers added 183,000 jobs in January
“We had a strong start to 2025 but it masked a dichotomy in the labor market. Consumer-facing industries drove hiring, while job growth was weaker in business services and production,” said Nela Richardson, Chief Economist, ADP.
The BLS Nonfarm Payroll report is Friday. It includes government jobs but ADP doesn’t.
Change in Jobs by Employer Size
Jobs from large corporations, defined as 250 employees and up are booming.
Corporations with 500+ employees added 69,000 jobs. Corporations with 250-499 employees added 39,000 jobs.
Medium-size businesses, defined as 50-249 employees added 53,000 jobs.
The following chart better shows the discrepancy.
ADP Change in Small, Medium, Large Employment
Year-Over-Year Job Growth Details
- Large: +976,000
- Medium: +288,000
- Small: +252,000
In the past year, large businesses accounted for 64.4 percent of private sector job gains. This is not normal and few economists have even noticed.
ADP Total Employment by Employer Size
Small- and medium-sized businesses are struggling. Yet, small- and medium-sized businesses account for 72.8 percent of total jobs.
I suspect it’s worse than shown on the basis that large- and medium-sized businesses are likely overweighted in ADP payrolls.
Employers with just a few family employees as well as sole proprietors are less likely ADP services and more likely to go out of business unnoticed.
Business Employment Dynamics (BED) lends support to this idea. I discussed the BED report a few days ago.
Business Employment Dynamics
Data from BLS, chart by Mish
BED Statistics by Firm Size
- In the second quarter of 2024, firms with 1 to 49 employees had a net employment loss of 259,000.
- Firms with 50 to 249 employees had a net employment gain of 57,000.
- Firms with 250 or more employees had a net employment decline of 25,000.
BED data just came out for the second quarter of 2024.
The BLS uses the Birth-Death model for businesses that estimates BED. And that model has consistently overstated jobs.
The BLS Confirms US is Now Losing Jobs in Net Business Creation
BED Net vs Nonfarm Payrolls
Please consider The BLS Confirms US is Now Losing Jobs in Net Business Creation
The BLS BED report provides further confirmation the BLS Birth/Death jobs model is seriously screwed up.
Small businesses are struggling like mad. This is something the ADP reports also show.
I hope you appreciate just how messed up this is.
I believe that why we have such a discrepancy between Gross Domestic Product (GDP) and Gross Domestic Income (GDI), numbers that should match but don’t.