Private companies added just 44,000 workers in July, below expectations, ADP reports

• Education and health services accounted for 36,000 of the 47,000 services-sector jobs added, while goods-producing sectors lost 3,000 positions with manufacturing adding only 2,000
• Job switchers saw pay gains accelerate to 7% annually, the highest since August 2025, while workers staying in their jobs saw steady 4.4% wage growth
• The July hiring number was the weakest since January, coming ahead of the official BLS report expected to show 83,000 total nonfarm payrolls and 4.2% unemployment

Summary: ADP Reports Weak July Private Sector Hiring

Private sector job growth slowed significantly in July, with companies adding just 44,000 workers, according to ADP's Wednesday report. This figure fell short of the Dow Jones consensus estimate of 75,000 and marked a sharp decline from June's downwardly revised 95,000 jobs.

Sector Performance:

The services sector drove all net gains, adding 47,000 positions, while goods-producing industries declined by 3,000. Education and health services led growth with 36,000 new jobs, continuing its trend as the dominant employment driver. Financial activities (+10,000), professional and business services (+9,000), and other services (+6,000) also posted gains.

Losses occurred in trade, transportation and utilities (-8,000) and natural resources and mining (-6,000). Manufacturing and construction saw minimal growth at 2,000 and 1,000 jobs respectively.

Wage Trends:

Annual pay growth remained steady at 4.4% for workers staying in their positions. However, job-switchers experienced 7% wage growth—the highest level since August 2025. ADP Chief Economist Nela Richardson noted this indicates supply constraints in certain labor market segments.

Market Context:

July's hiring represented the weakest monthly gain since January. The report comes ahead of Friday's official Bureau of Labor Statistics data, expected to show 83,000 new hires with unemployment holding at 4.2%.

Federal Reserve officials have expressed confidence in the labor market while prioritizing inflation concerns. Markets anticipate a potential rate hike before year-end if inflation data doesn't improve, maintaining pressure on the Fed's current benchmark rate policy.