US companies added 44,000 jobs in July, marking the lowest increase since January and falling short of all economist expectations, according to ADP Research data released Wednesday. The figure came in below economists' estimates of 70,000 jobs and represents a significant deceleration from the revised 95,000 increase recorded in June, as reported by Bloomberg. The July gain was smaller than all estimates in a Dow Jones survey of economists, suggesting some cooling in hiring momentum after a recent stretch of solid gains. On net, all of the gains came from the services sector, which added 47,000 jobs, while goods-producing companies saw a decline of 3,000 jobs.
Despite the moderation in overall hiring, the report revealed wage growth for job-changers picked up to the strongest pace in nearly a year, with workers who switched jobs seeing a 7% increase in pay from a year earlier. This represents the largest increase since August 2025. Wage growth for those who remained in their positions held steady at 4.4% annually. By industry, financial activities and manufacturing registered stronger wage gains, as reported by ADP. "Job-changers are highly sensitive to real-time economic conditions, and their rapid pay growth implies supply constraints in parts of the labor market," said Nela Richardson, chief economist at ADP and contributor to Bloomberg Television. "Typical hiring patterns, meanwhile, are changing as employers react to shifting macroeconomic conditions."
The ADP report showed companies added 36,000 jobs in education and health services, continuing a long-standing trend for the industry in leading employment growth. Financial activities added 10,000 jobs, professional and business services contributed 9,000, and the other services category saw a gain of 6,000. However, trade, transportation and utilities lost 8,000 jobs, natural resources and mining was off 6,000, manufacturing saw growth of just 2,000, while construction added 1,000 jobs. More than half of the total payroll gain came from small firms, with firms employing fewer than 50 people leading with 23,000 new jobs. Large businesses with 500 or more employees gained 13,000 jobs, businesses with 50 to 499 employees gained 8,000 workers, and establishments with fewer than 50 employees gained 23,000 jobs.
July data pointed to a modest turnaround in business activity across the service economy, supported by an expansion of new work for the first time since February. Lower inflationary pressures were also a positive development in July, with average cost burdens increasing at the weakest pace for five months. The Services PMI registered 54.1%, the 25th consecutive month in expansion territory, with the Business Activity Index increasing 3.7 percentage points to 59.1% from June's reading of 55.4%. The New Orders Index registered 57.2%, 2.1 percentage points above June's figure of 55.1%, while the Employment Index returned to contraction territory with a reading of 47.4%, a 3.8-percentage point decrease from June's 51.2%.
Most Federal Reserve officials have expressed confidence in the jobs picture and are putting inflation concerns at the forefront. The Fed has kept its benchmark interest rate steady, though markets are betting on a hike before the end of the year if the inflation data does not improve. The ADP report comes two days before the Bureau of Labor Statistics releases its official nonfarm payrolls report for July. Economists surveyed by Dow Jones expect that count to show 83,000 hires, up from June's 57,000, and the unemployment rate holding at 4.2%.
The government's employment report due Friday, which also includes public-sector hiring, is expected to show US employers added 83,000 jobs in July, up from June's 57,000, which would be an improvement from the current moderate pace. ADP bases its findings on payrolls covering more than 26 million US private-sector employees, providing comprehensive coverage of the labor market dynamics. The monthly employment gain was the smallest since January during a year in which the labor market has steadied after showing little progress in 2025.
