Private-sector hiring slowed sharply in July, with employers adding the fewest jobs of the year in a report that could renew concerns about the strength of the labor market.
Why it matters: If hiring is beginning to cool meaningfully, the Federal Reserve may be less inclined to raise interest rates at its next meeting despite lingering inflation concerns.
- Private employers added just 44,000 jobs in July, according to the ADP National Employment Report.
- That was down from 95,000 in June, marked the weakest monthly gain of 2026 and came in well below economists’ expectations for roughly 85,000 new jobs.
Breaking it down: Education and health services accounted for nearly all of the job growth, adding 36,000 positions. Financial activities contributed another 10,000 jobs, while professional and business services added 9,000.
- Leisure and hospitality led the declines, shedding 11,000 jobs. Trade, transportation and utilities lost 8,000 positions, while natural resources and mining cut 6,000.
Wages: Despite slower hiring, wage growth remained firm. Workers who stayed in their jobs saw pay increase 4.4% from a year earlier, while employees who changed jobs enjoyed a 7.0% pay increase—the fastest pace since August 2025.
What they’re saying: “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 ADP Chief Economist Dr. Nela Richardson. “Typical hiring patterns, meanwhile, are changing as employers react to shifting macro-economic conditions.”
Impact on Mortgage Rates: One weak jobs report won’t change the Federal Reserve’s outlook on its own, but if July marks the beginning of a broader slowdown in hiring, it could reduce the likelihood of another rate hike and provide some support for lower mortgage rates.