US companies’ hiring activity picked up only modestly in December, indicating that momentum remained weak going into 2026.

According to data released on Wednesday by the ADP Research Institute, US private-sector employment increased by 41,000 in December after a decline in November. The median forecast of economists surveyed by Bloomberg had called for a 50,000 gain.

The report adds further evidence that the labour market is gradually cooling rather than deteriorating sharply. Recent hiring has been subdued and the unemployment rate has crept higher, weighing on economists’ expectations for the new year and denting Americans’ confidence in their job prospects.

The latest gains were driven mainly by education and health services, as well as leisure and hospitality. In contrast, employment in professional services and manufacturing declined. Notably, after several months of layoffs, small businesses have returned to hiring.

ADP’s chief economist noted that while large employers are still trimming headcount, small and micro businesses have recovered from November’s job losses and returned to positive hiring by year-end.

Labour-market softness has been a key area of focus for Federal Reserve officials, who delivered three consecutive rate cuts to close out 2025. Policymakers are now weighing whether to cut rates further this year, as they try to strike a balance between weakening employment and still-stubborn inflation.

Data due this week will help shape the Fed’s decision later this month. The most critical release will be Friday’s official nonfarm payrolls report, which is expected to show modest job growth in December and a slight dip in the unemployment rate.

Market Commentary:

On the daily chart, the US Dollar Index has posted a mild rebound, with MACD lines and histogram extending below the zero line. The ADP report showed that pay growth for job changers accelerated after hitting its smallest annual gain since 2021 in the prior month. In December, wages for job changers rose 6.6%, while pay for job stayers increased 4.4%.