Business Sector Hit Hard in January by Layoffs and Tightening Labor Demand

While the federal government may be postponing the release of its January jobs report, independent studies are showing dire conditions for private sector work.

Data firms are reporting that January 2026 saw the most layoffs since 2009 after the Global Financial Crisis and the lowest number of jobs added to the economy since 2020, during the height of the pandemic.

Business and professional services were among the sectors hardest hit.

Job cuts in the two sectors amounted to 108,435 positions in the first month of 2026, a 118 percent increase over January 2025, according to Bloomberg, which cited data from recruiting firm Challenger, Gray & Christmas. The data showed a 13 percent decrease in hiring intentions from a year earlier to 5,306.

Job cuts are common at the beginning of every year as employers plan out the next 12 months, but this round stands out for a number of reasons.

“Generally, we see a high number of job cuts in the first quarter, but this is a high total for January,” Andy Challenger, workplace expert and chief revenue officer for Challenger, Gray & Christmas, said in a statement. “It means most of these plans were set at the end of 2025, signaling employers are less than optimistic about the outlook for 2026.”

Payroll services firm ADP, for example, reported that the 22,000 people hired in January numbered about half of the 45,000 nationwide hires analysts were predicting, with professional and business services eliminating 57,000 positions in January, according to CNN.

This was the heaviest blow to the labor market since August 2024.

One bright spot, however, is that wages have remained stable, with increases of 4.5 percent on average in January.

For the few who do find new employment, wages have increased on average to 6.4 percent in January from 6.6 percent in December, according to data from ADP and CNN.

Mark Hallum can be reached at mhallum@commercialobserver.com.