The ADP national employment report shows 107,000 private jobs added in January, a drop from 158,000 new jobs in December. The January increase is below the consensus of 145,000 in the Econoday survey of forecasters. If job gains were fewer than expected, they were broad-based.

Goods-producers added 30,000 jobs with gains of 22,000 in construction, 6,000 in natural resources/mining, and 2,000 in manufacturing. Activity in the manufacturing sector has been weak, but construction continues to benefit from demand for new homes while the existing home market has limited inventory.

Service-providers hired 77,000 new workers in January. There are gains in all industries except for a decrease of 9,000 in information where restructuring is ongoing. The largest gains are 28,000 in leisure/hospitality, 23,000 in trade/transportation/utilities, and 17,000 in education/health services.

Jobs were added at establishments of all sizes. Payrolls at small firms (1-49 employees)are up 25,000, medium establishments (50-499) up 61,000, and large establishments (500+) are up 31,000.

Upward pressures on pay are easing. In January, the year-over-year increase for job-stayers is up 5.2 percent, down from 5.4 percent in December and continuing a steady, if shallow, trend lower. Pay increases for job-changers are up 7.2 percent from January 2023. ADP said this is the smallest annual gain since May 2021.

Forecasters see ADP's January employment number at 145,000. This would compare with December growth in private payrolls reported by the Bureau of Labor Statistics of 164,000. ADP's number for December was 164,000.

The national employment report from Automated Data Processing Inc. is computed from ADP payroll data and offers advance indications on the U.S. workforce. ADP's data cover more than 500,000 companies totaling more than 25 million employees. The report is produced by ADP Research Institute in collaboration with Stanford Digital Economy Lab.

Market players have become accustomed to the excitement on employment Friday and realize the rich detail of the monthly employment situation can help set the tone for the entire month. While economists have improved their nonfarm payroll forecasts over the years, it is not unusual to see surprises on employment Friday. To that end, the ADP's national employment report can help improve the payroll forecast by providing information in advance of the employment report.

The employment statistics also provide insight on wage trends, and wage inflation is high on the list of enemies for the Federal Reserve. Fed officials constantly monitor this data watching for even the smallest signs of potential inflationary pressures, even when economic conditions are soggy. If inflation is under control, it is easier for the Fed to maintain a more accommodative monetary policy. If inflation is a problem, the Fed is limited in providing economic stimulus.

By tracking jobs, investors can sense the degree of tightness in the job market. If wage inflation threatens, it's a good bet that interest rates will rise; bond and stock prices will fall. No doubt that the only investors in a good mood will be the ones who watched the employment report and adjusted their portfolios to anticipate these events. In contrast, when job growth is slow or negative, then interest rates are likely to decline - boosting up bond and stock prices in the process.