Private companies added only 44,000 jobs in July, falling well short of market expectations and marking a sharp slowdown from the prior month.
The figure came in below the Dow Jones consensus forecast of 75,000 and represented a significant drop from the downwardly revised 95,000 jobs added in June.
Payrolls processing firm ADP released the data Wednesday, painting a cautious picture of the private labor market heading into the second half of the year.
Nearly all of the monthly job gains were concentrated in the services sector, which added 47,000 positions, while goods-producing industries posted a net loss of 3,000 jobs.
Education and health services led all sectors with 36,000 new positions, continuing a longstanding trend of the industry driving overall employment growth.
Financial activities added 10,000 jobs, professional and business services contributed 9,000, and the broader other services category saw a gain of 6,000 workers.
Trade, transportation, and utilities shed 8,000 jobs, while natural resources and mining lost 6,000, and manufacturing managed only a modest gain of 2,000.
Small businesses employing fewer than 50 people led hiring across company sizes, accounting for 23,000 of the new positions added during the month.
Pay growth for job-stayers held steady at 4.4% annually, but workers who switched jobs saw a 7% pay increase, the largest such gain since August 2025.
“Job-changers are highly sensitive to real-time economic conditions, and their rapid pay growth implies supply constraints in parts of the labor market,” ADP chief economist Nela Richardson said.
Richardson added that “typical hiring patterns, meanwhile, are changing as employers react to shifting macroeconomic conditions,” signaling broader uncertainty among businesses navigating the current environment.
The July figure was the smallest monthly employment gain since January, coming during a year in which the labor market has largely steadied after showing little progress throughout 2025.
Most Federal Reserve officials have expressed confidence in the jobs picture and are keeping inflation concerns at the forefront of their policy deliberations.
The Fed has held its benchmark interest rate steady, though markets are currently pricing in a potential hike before year-end if inflation data fails to improve.
The ADP report arrives two days ahead of the Bureau of Labor Statistics’ official nonfarm payrolls release, which economists surveyed by Dow Jones expect to show 83,000 new hires.
That official count would represent an increase from June’s 57,000, with the unemployment rate forecast to hold steady at 4.2%.
