Private sector job creation was stronger than expected in April, providing more evidence that the labor market is stabilizing and reducing the Federal Reserve’s incentive to cut interest rates as inflation remains high, ADP reported on Wednesday.
The payroll firm said companies added 109,000 jobs in the month, up from 61,000 in March and above the Dow Jones consensus estimate of 84,000. ADP growth in April was the highest since January 2025. The March total was revised downward by 1,000 people.
Wages for those who stayed in their jobs rose by 4.4% annually, a decline of 0.1 points.
As in previous years, job creation is concentrated in a few key categories, indicating that while overall employment is strong, the benefits are not spreading across sectors.
Education and health services again accounted for the majority, with 61,000 new jobs. Trade, transportation and public works increased by 25,000 people. Construction, another consistent leader in recent months, increased by 10,000 jobs, followed by financial activity by 9,000.
The Trump administration’s efforts to restore manufacturing jobs through tariffs resulted in only a modest 2,000 job increase in the sector. Leisure, hospitality and information services each increased by 4,000. Professional and business services reported losses of 8,000 people.
In terms of size, businesses with fewer than 50 employees grew by 65,000, while businesses with 500 or more employees grew by 42,000.
“Small businesses and large businesses are hiring, but middle class employment is softening,” said Nella Richardson.
Chief Economist of ADP. “Large companies have the resources to deploy, and small businesses are the most agile, both important advantages in a complex work environment.”
The headline numbers were better than expected, but they are broadly consistent with what Fed policymakers and economists have described as a “low-hires, low-fires environment,” where companies are reluctant to lay off workers but are also slashing employment.
The current situation is that the Fed maintains its pattern of keeping interest rates on hold as the labor market ignores concerns about a deepening economic trough and inflation remains high, largely due to tariffs and the impact of the Iran war.
The Federal Open Market Committee, which decides interest rates, voted again last week to keep key interest rates unchanged. But the vote featured an unusually high number of four dissenting voices, three from officials who thought the committee should remove language from the post-meeting statement indicating that the Fed’s next action would be to cut interest rates.
The market will now focus on the Bureau of Labor Statistics’ nonfarm payrolls release on Friday. The consensus on Wall Street is for job growth to stabilize at 55,000 jobs and the unemployment rate to stabilize at 4.3%.
BLS reports differ from ADP in that they include government work. Additionally, ADP’s dataset is biased toward small and medium-sized enterprises.
