US ADP Employment Drops to 44K, Signaling a Cooling Labor Market

US private companies added 44,000 jobs in July 2026, marking the smallest gain since the beginning of the year. This figure fell short of the market forecast of 70,000 and was down from the revised June figure of 95,000 jobs.

The ADP data indicates that the labor market's momentum is cooling after previously recording solid gains. The service sector still added 47,000 jobs, driven primarily by education and healthcare, financial activities, professional and business services, and information.

However, some sectors showed weakness. Trade, transportation, and utilities lost 8,000 jobs, while the leisure and hospitality sector shed 11,000. The goods-producing sector also contracted by 3,000 jobs, largely due to declines in natural resources and mining.

Despite the slowdown, wage growth continues to show upward pressure. Workers remaining in their current positions saw a 4.4% annual pay increase, while those who changed jobs received a 7% raise—the highest since August 2025. These conditions suggest a persistent tightness in labor supply across certain segments of the job market.

Regarding market impact, the weaker ADP data could dampen expectations regarding the strength of the US labor market ahead of Friday's Nonfarm Payrolls (NFP) report. However, persistent wage growth may keep the Federal Reserve cautious, as inflation risks have not yet been fully mitigated. If the NFP report is also weak, the US dollar could face downward pressure while gold might find support; conversely, if wage growth remains hot, expectations for a hawkish Fed stance could persist. (asd)*

Source: Newsmaker.id