Private companies in the U.S. added a modest 44,000 jobs in July, according to payroll processor ADP’s report released on Wednesday. This hiring pace slowed significantly from June’s revised figure of 95,000 and trailed market expectations of a 75,000 increase. The total nonfarm private payroll gain reflected soft labor market conditions as services firms accounted for the majority of job growth, while goods-producing sectors faced a net job decline.

Within the services sector, healthcare and education led employment gains adding 36,000 positions, consistent with ongoing trends in these industries. Financial activities contributed 10,000 jobs, professional and business services added 9,000, and other services saw an increase of 6,000 jobs. Conversely, trade, transportation, and utilities lost 8,000 jobs, natural resources and mining decreased by 6,000, and manufacturing grew slightly by 2,000. Construction added only 1,000 new jobs in July.

Compensation trends reveal those switching jobs received a 7% pay increase, marking the highest raise for job changers since August 2025, while employees remaining in their positions saw pay growth of 4.4% annually. ADP’s chief economist, Nela Richardson, interpreted the heightened wages for job switchers as indicative of labor supply constraints in certain market segments, highlighting employers’ adjustments to evolving macroeconomic conditions.

This ADP report precedes the official government data scheduled for release in two days by the Bureau of Labor Statistics, where economists forecast 83,000 job additions in July and an unemployment rate steady at 4.2%. The subdued payroll growth in July is the smallest monthly gain since January, reflecting a labor market that has stabilized throughout 2026 despite persistent inflation concerns and a Federal Reserve cautious on future interest rate moves.