The rate of job creation in the U.S. private sector fell short of expectations in July, indicating a cooling in labor market conditions.

Private employers in the U.S. added 122,000 jobs in the past month, the lowest since January 2024 and down from the upwardly revised 155,000 jobs in June, the ADP National Employment Report shows.

The reading also marks the fourth consecutive month of declining growth in U.S. private employment and missed the projected 150,000 jobs, according to consensus estimates from TradingEconomics.

The ADP's private employment snapshot, based on payroll data from over 500,000 companies and more than 25 million employees, provides a preview of the official jobs report expected this Friday. Economists predict that total nonfarm payrolls, including government jobs, will decrease from 206,000 in June to 175,000 in July. The unemployment rate is expected to remain steady at 4.1%, and average hourly earnings are anticipated to maintain a 0.3% monthly increase.

July ADP National Employment Report: Key Highlights

• Services-providing companies added 85,000 jobs, while goods producers added 37,000.
• Industries experiencing increases in employment were trade, transportation, and utilities (61,000), construction (39,000), leisure and hospitality (24,000), financial activities (14,000).
• Industries witnessing the sharpest job contractions were professional/business services (down by 37,000), information (down by 18,000) and manufacturing (down by 4,000).
• Year-over-year pay increases for job-stayers were 4.8% in July, down from 4.9% in June and marking the slowest pace in three years. Pay gains for those who switched jobs also fell, down from 7.7% to 7.2%.
• "With wage growth abating, the labor market is playing along with the Federal Reserve's effort to slow inflation. If inflation goes back up, it won't be because of labor." Nela Richardson, chief economist at ADP, said.

Market Reactions

• The U.S. Dollar Index (DXY), as tracked by the Invesco DB USD Index Bullish Fund ETF (NYSE:UUP), fell 0.4%.
• Treasury yields softened slightly, with the 10-year Treasury note trading at 4.13%.
• Gold, as tracked by the SPDR Gold Trust (NYSE:GLD), rose 0.4%.
• Futures on U.S. equity indices traded higher in the premarket on Wednesday, following the negative close seen Tuesday.
• Among notable premarket movers, shares of Microsoft Corp. (NYSE:MSFT) traded 3% lower as growth in the business cloud softened, despite the tech giant reported stronger-than-expected earnings. Advanced Micro Devices Inc. (NASDAQ:AMD) rallied over 7%.

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