Private sector employers in the United States added 44,000 jobs in July, the smallest monthly gain of 2026 and a sharp pullback from June’s revised figure of 95,000, according to the ADP National Employment Report released August 5. The number fell well below the Dow Jones consensus forecast of 75,000 and arrived two days before the Bureau of Labor Statistics is scheduled to release its official nonfarm payrolls report for July.
Key Takeaways
- Private employers added 44,000 jobs in July, down from a revised 95,000 in June and below the 75,000 consensus forecast.
- The services sector produced all net job creation at 47,000, led by education and health services (36,000) and financial activities (10,000).
- Goods-producing industries posted a net loss of 3,000 jobs, with natural resources and mining down 6,000.
- Leisure and hospitality lost 11,000 positions, while trade, transportation, and utilities shed 8,000.
- Year-over-year pay growth for job-stayers held at 4.4%, but wages for job-changers accelerated to 7.0%, the fastest rate since August 2025.
- The Bureau of Labor Statistics nonfarm payrolls report for July is due Friday, August 8; economists expect 83,000 hires and unemployment holding at 4.2%.
Healthcare Carried Nearly All of July’s Job Growth
The concentration of hiring in a single sector is the detail that stands out in the July data. Education and health services alone accounted for 36,000 of the month’s 47,000 service-sector jobs, making healthcare the overwhelming driver of private payroll expansion for the second consecutive month. Financial activities contributed 10,000 positions and professional and business services added 9,000, while the information sector added 5,000.
On the other side of the ledger, leisure and hospitality lost 11,000 jobs, reversing a stretch of modest gains earlier in the year. Trade, transportation, and utilities shed 8,000 positions. The losses in consumer-facing service industries suggest that elevated living costs and shifting consumer spending patterns are beginning to weigh on sectors that rely on discretionary household spending.
Goods-producing industries recorded a net loss of 3,000 jobs. Natural resources and mining contracted by 6,000, partially offset by modest gains in manufacturing (2,000) and construction (1,000). The contraction in mining and extraction reflects ongoing volatility in energy markets, where price swings tied to geopolitical disruptions have made capital planning difficult for producers.
Regional Disparities Reveal an Uneven Labor Market
The geographic breakdown in the ADP data shows hiring concentrated in the Northeast, which added 37,000 jobs. The Mid-Atlantic sub-region contributed 21,000 and New England added 16,000. The South added 9,000, driven entirely by the West South Central region (15,000), which includes Texas, while the South Atlantic lost 8,000 positions.
The Midwest posted a net loss of 9,000 jobs, with the East North Central region (which includes Illinois, Ohio, Michigan, Indiana, and Wisconsin) losing 11,000. The West added a modest 7,000, with the Pacific region contributing 11,000 and the Mountain region losing 4,000.
The regional pattern suggests that July’s hiring was not a broad-based slowdown so much as a market where job creation is increasingly concentrated in a handful of metro areas and industries. For policymakers and employers in the Midwest and parts of the South, the data points to labor market conditions that are cooling faster than the national averages indicate.
Job-Changers Are Commanding Higher Pay Despite Slower Hiring
The wage data in the ADP report introduces a layer of complexity that complicates the narrative of a straightforward slowdown. Year-over-year pay growth for workers who stayed in their jobs held steady at 4.4%, consistent with the rate reported in June. For workers who changed employers, however, annual pay growth accelerated to 7.0%, the fastest pace since August 2025.
ADP chief economist Nela Richardson noted that job-changers “are highly sensitive to real-time economic conditions, and their rapid pay growth implies supply constraints in parts of the labor market.” The gap between job-stayer and job-changer wage growth suggests that while overall hiring is decelerating, employers in specific sectors are competing aggressively for experienced workers willing to move.
By industry, manufacturing workers who stayed in their positions saw 5.0% annual pay growth, followed by financial activities at 5.2%. Workers at large firms (500 or more employees) and medium firms (250 to 499 employees) both saw 4.8% wage growth, while the smallest businesses (1 to 19 employees) recorded pay growth of just 2.4%, underscoring the wage premium that scale continues to command in a tightening market.
Broader Economic Context Shows a Two-Track Picture
The ADP numbers arrive against a backdrop of otherwise solid macroeconomic data. The U.S. Treasury Department noted in its August Borrowing Advisory Committee statement that business investment rose nearly 10% at an annual rate over the first half of 2026, driven by spending on equipment and intellectual property. Employment growth accelerated in the second quarter, with 334,000 net new jobs added, and worker wages continue to outpace inflation on an annual basis.
The Federal Reserve has kept its benchmark interest rate steady, and most officials have expressed confidence in the labor market while placing inflation concerns at the forefront. Markets are pricing in the possibility of a rate hike before year-end if inflation data does not improve. The July ADP miss does not, on its own, alter that calculus significantly, but it adds another data point to a trend of decelerating private-sector hiring that began in the spring.
June’s private payroll figure was revised downward from 98,000 to 95,000, and May’s 122,000 was the last month in which hiring was described as broad-based. Three consecutive months of progressively weaker numbers establish a trajectory that Friday’s BLS report will either confirm or complicate. Economists surveyed by Dow Jones expect the official count to show 83,000 hires and the unemployment rate holding at 4.2%.
Small Businesses Accounted for the Largest Share of New Hiring
By establishment size, businesses with fewer than 50 employees contributed the largest share of July’s job creation. Small establishments added a net 23,000 positions, with firms of 1 to 19 employees adding 27,000 and firms of 20 to 49 employees losing 4,000. Medium-sized establishments (50 to 499 employees) added 8,000, and large establishments (500 or more employees) added 13,000.
The reliance on small-business hiring to carry the monthly total is notable because small firms typically have less capacity to absorb economic shocks and are more sensitive to changes in credit conditions and consumer demand. If borrowing costs remain elevated and consumer spending continues to moderate, the segment currently producing the bulk of new jobs could be the first to pull back.
FAQs
What Is the ADP National Employment Report?
The ADP National Employment Report is an independent measure of private-sector employment produced by ADP Research in collaboration with the Stanford Digital Economy Lab. It is based on anonymized payroll data from more than 26 million employees and is released two days before the Bureau of Labor Statistics’ official jobs report.
How Does the ADP Report Differ From the BLS Jobs Report?
The ADP report covers only private-sector employment, while the BLS nonfarm payrolls report includes both private and government hiring. The two reports use different methodologies and data sources, and their monthly figures do not always align closely.
What Does Rising Job-Changer Pay Growth Signal About the Economy?
Accelerating wages for workers who switch employers typically indicates that specific sectors or roles face supply constraints, meaning employers must offer higher compensation to attract experienced talent even as overall hiring slows.
