US private sector hiring slowed significantly in July with just 44,000 new positions added. The latest report from payroll processing company ADP showed that the figure was well below the market consensus forecast of 75,000, thus recording the lowest growth since January.
The services sector continued to be the sole driver of the labor market with an addition of 47,000 jobs, while the goods manufacturing sector contracted by 3,000 jobs. The education and healthcare industries dominated the growth with an addition of 36,000 jobs, maintaining its dominance as the main driver of the U.S. services sector.
Despite the decline in overall employment, the wage growth rate for workers changing careers jumped to 7% annually, the highest since August 2025. ADP Chief Economist Nela Richardson assessed that the wage surge signals that labor supply constraints still exist in some market segments.
The slowing labor market comes as the Federal Reserve (Fed) continues to focus on inflation threats over unemployment risks. Financial markets are now pricing in a potential hike in the benchmark interest rate before the end of the year if domestic inflation data fails to show signs of a steady decline.
The ADP data report serves as an early indicator ahead of the release of the official Non-Farm Payrolls (NFP) report by the U.S. Bureau of Labor Statistics. Analysts' consensus is for an increase of 83,000 jobs in the official report with the national unemployment rate remaining steady at 4.2%.
