ADP says businesses added the fewest new jobs in six months. A summer slowdown in hiring?

By Jeffry Bartash

Business create just 44,000 new jobs in July as hiring slows

ADP said businesses added the fewest new jobs in July in six months

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ADP said U.S. businesses created just 44,000 new jobs in July - the smallest increase in six months - in another sign of a sluggish labor market in which hiring is unusually soft.

The one bright spot: People who switched jobs saw an increase in pay, possibly a sign of a growing shortage of labor. While companies aren't doing lots of hiring, they might have to pay more to lure talented people from other jobs.

"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 of ADP, the nation's largest processor of business payrolls.

ADP is an appetizer of sorts ahead of the main course for markets: the official U.S. employment report on Friday. Economists predict a 98,000 increase in new jobs in July based on information collected by the Bureau of Labor Statistics.

The two reports differ month to month, but they head in the same direction over time.

What they show right now is a stagnant but steady labor market. Hiring is slow, but layoffs are also near record lows - what economists call a low-hire, low-fire economy.

Key details: ADP showed an acceleration in hiring earlier in the year to a 16-month high of 122,000 in May, but net employment growth then fell to a revised 95,000 in June and 44,000 in June.

Some of the rise and fall in hiring could be tied to the World Cup, Richardson said.

Employment at hotels and restaurants, for instance, fell in July to wipe out the small increase in hiring in the first six months of the year.

Most of the 36,000 jobs created in July were concentrated as usual in healthcare and education. Financial companies and white-collar businesses also added jobs.

The increase in annual pay earned by "job changers" - people who leave one job for another - rose to 7% in July to mark the highest level since the summer of 2025.

That suggests people are actively looking for higher-paying jobs, which would be a sign the labor market might be better than it looks.

The annual increase in pay for people who stay in the same job was unchanged at 4.4%. It has hardly changed in the past year and a half.

Big picture: The U.S. jobs market is fine for those who already have a job. Layoffs are low and most companies are reluctant to let go of workers when skilled labor is hard to find.

Yet hiring is unlikely to speed up until the conflict with Iran is resolved and inflation subsides, Richardson said.

Market reaction: The Dow Jones Industrial Average DJIA and S&P 500 SPX were set to rise again on Wednesday after surging to fresh record highs.

-Jeffry Bartash

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08-05-26 0943ET