Private sector hiring slowed in July, with employers adding fewer workers than expected as job growth remained concentrated in healthcare, according to payroll processor ADP.
Private companies added a seasonally adjusted 44,000 jobs during the month, down from a downwardly revised 95,000 in June and well below economists' expectations for 75,000 new positions.
The services sector accounted for all of the net employment gains, adding 47,000 jobs, while goods-producing industries shed 3,000 positions.
Healthcare and education services led hiring with 36,000 new jobs, continuing the sector's long-standing role as the largest contributor to employment growth. Financial activities added 10,000 positions, professional and business services gained 9,000, while other services increased by 6,000.
Elsewhere, trade, transportation and utilities lost 8,000 jobs, while natural resources and mining declined by 6,000. Manufacturing added 2,000 jobs and construction contributed 1,000.
Hiring was relatively balanced across business sizes, with firms employing fewer than 50 people leading the way by adding 23,000 positions.
Annual pay growth for workers who remained in their current jobs held steady at 4.4%, while employees changing jobs received an average 7% pay increase, the fastest pace 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 labour market,” noted ADP’s chief economist, Nela Richardson.
“Typical hiring patterns, meanwhile, are changing as employers react to shifting macroeconomic conditions.”
July marked the weakest monthly employment gain since January, reflecting a labour market that has stabilised after showing limited momentum throughout 2025.
The report comes ahead of Friday's closely watched U.S. nonfarm payrolls report from the Bureau of Labor Statistics.
Economists expect the official data to show 80,000 jobs were created in July, up from 57,000 in June, while the unemployment rate is forecast to remain at 4.2%.
In a separate report, the Institute for Supply Management (ISM) said the U.S. services sector continued to expand in July, marking its 25th consecutive month of growth.
The ISM Services PMI edged up to 54.1 in July from 54.0 in June, remaining comfortably above the 50-point threshold that separates expansion from contraction, but below market expectations of 54.5.
