US private sector payrolls grew by 44,000 jobs in July 2026, according to ADP data released on August 5, the smallest increase since January and below economists’ estimates [1, 2, 3]. However, the official US Bureau of Labor Statistics nonfarm payroll report released August 7 showed an unexpected decline of 23,000 jobs in July, defying forecasts for an 80,000 gain [4, 5, 6, 7, 8, 9].

The divergence underscored a sharp slowdown in hiring momentum. ADP’s data cover over 26 million private-sector employees and showed education and health services added 36,000 jobs and financial activities 10,000, while leisure and hospitality declined by 11,000 [1, 2, 9]. Official figures revealed losses concentrated in public education (-50,000), retail (-19,000), and financial activities (-14,000), with leisure and hospitality also weakening [9]. Meanwhile, manufacturing and construction jobs grew, partly boosted by AI data center projects [9].

Despite the job losses, the US unemployment rate fell to 4.1% in July from 4.2% in June, driven partly by the labor force participation rate dropping to a near five-year low of about 61.4% [4, 8, 10, 9]. Wage growth remained strong: workers who changed jobs saw a 7% year-over-year increase—the fastest in nearly a year—and wages for those staying in the same job rose about 4.4% [1, 2]. ADP Chief Economist Nela Richardson said, "Job-changers are highly sensitive to real-time economic conditions, and their rapid pay growth implies supply constraints in parts of the labor market" [1]. She also noted, "Typical hiring patterns are changing as employers react to shifting macroeconomic conditions" [2].

June’s official job growth was revised down sharply from 57,000 to 20,000, leading to a combined downward revision of 103,000 jobs for May and June [4, 8, 9]. This further complicates the labor market outlook.

The weaker employment data have reduced market expectations for a Federal Reserve interest rate hike at the September meeting, with the probability falling from about 57% to 44% [8, 9]. Morgan Stanley Wealth Management’s Jantern cautioned that stronger inflation data next week could still influence Fed decisions despite the cooling job growth. An analyst noted the July report "is irrelevant to the Fed" since the Federal Open Market Committee will see August jobs data before its September meeting and remains confident in labor market resilience [8].

The US stock market responded positively to the weak jobs report, with the S&P 500 hitting a record high and major indexes logging their biggest weekly gains since mid-April 2026 [10].

A job fair held in Dallas on July 29 was part of ongoing employment activity during a slow month for job creation [1]. Analysts continue to watch August employment and upcoming inflation data closely ahead of the Fed’s September policy decision [8].