Private payrolls add just 44,000 in July, ADP says

• Education and health services accounted for 36,000 of the 47,000 service sector jobs added, while goods-producing companies lost 3,000 positions with manufacturing adding only 2,000
• Pay growth for job switchers jumped to 7%, the highest since August 2025, while workers staying in their jobs saw 4.4% annual wage growth, suggesting supply constraints in parts of the labor market
• The weak July figure was the smallest monthly gain since January and comes ahead of Friday's official BLS jobs report, expected to show 83,000 hires with unemployment holding at 4.2%

Private Payrolls Add Just 44,000 in July, ADP Reports

Key Findings:

Private sector employment growth slowed significantly in July, with companies adding only 44,000 jobs, well below the Dow Jones consensus forecast of 75,000 and down from June's downwardly revised 95,000, according to ADP's Wednesday report. This marks the smallest monthly gain since January.

Sector Breakdown:

The services sector drove all net growth, adding 47,000 positions, while goods-producing industries lost 3,000 jobs. Healthcare and education led hiring with 36,000 new positions, continuing its trend as the employment growth leader. Financial activities added 10,000 jobs, professional and business services contributed 9,000, and other services gained 6,000.

On the negative side, trade, transportation, and utilities shed 8,000 jobs, natural resources and mining lost 6,000, while manufacturing and construction saw minimal gains of 2,000 and 1,000 respectively.

Wage Growth:

Annual pay increases held steady at 4.4% for workers remaining in their positions. However, job switchers experienced 7% wage growth—the highest level since August 2025—suggesting supply constraints in certain labor market segments.

Market Implications:

ADP Chief Economist Nela Richardson noted that job-changers' rapid pay growth indicates persistent supply constraints and shifting hiring patterns as employers respond to evolving macroeconomic conditions.

The weak report precedes Friday's official Bureau of Labor Statistics nonfarm payrolls release, expected to show 83,000 hires with unemployment holding at 4.2%. Federal Reserve officials remain focused on inflation concerns despite labor market confidence, with markets anticipating a potential rate hike before year-end if inflation doesn't improve.