Private-sector employment increased by 54,000 jobs in August, according to payroll processor ADP, falling short of economists’ expectations for 75,000 new positions and marking a sharp deceleration from the previous month’s pace.
The August figure represents a significant cooling from July’s revised total of 106,000 jobs, suggesting employers are growing more cautious about hiring amid economic uncertainty. The ADP National Employment Report, released Wednesday, tracks payroll data from more than 26 million private-sector workers.
Annual pay growth held steady at 4.4 percent for workers who remained in their jobs, while those who switched positions saw wages rise 7.1 percent year-over-year.
The leisure and hospitality sector dominated job creation, adding 50,000 positions in August. Construction contributed another 16,000 jobs to the monthly tally. However, manufacturing bucked the trend, shedding 7,000 positions during the month.
By company size, medium-sized businesses led hiring with 25,000 new jobs, followed by large establishments at 18,000 and small businesses at 12,000.
The weaker-than-expected reading comes as Federal Reserve officials prepare for their next policy meeting, where they are widely expected to cut interest rates. Labor market data has become a key focus for policymakers as they weigh the pace and magnitude of potential rate reductions.
ADP emphasizes that its report is not intended as a forecast of the government’s official employment data, a clarification the company made after revising its methodology several years ago to position the report as an independent data point. The Bureau of Labor Statistics is scheduled to release its August jobs report on Friday, which will include both private and government employment as well as the unemployment rate.
The modest job gains in August continue a pattern of labor market moderation that began earlier this year. While employers are still hiring, the pace has slowed considerably from the robust growth seen in late 2024 and early 2025.
The Trump administration’s policies aimed at border security and a reduction in the number of illegal aliens living in the U.S. has likely reduced the supply of labor and the number of jobs needed to be added each month to maintain full employment. Alexander Bick, an economist at the St. Louis Fed, recently estimated that the economy needs to add just 32,000 to 82,000 jobs to keep unemployment from rising, down significantly from an earlier estimate of 150,000 based on pre-Trump population trends.
“Payroll growth has slowed in 2025, reflecting both lower demand and lower supply of labor. Estimates of the breakeven pace of job growth have fallen with the recent decline in immigration and lower labor force participation. Breakeven estimates are currently in the range of 30,000 to 80,000 jobs per month, compared with estimates above 100,000 in prior years,” St. Louis Fed President Alberto Musalem said in a recent speech.
The ADP report covers nearly 14.8 million individual pay observations and is produced in collaboration with the Stanford Digital Economy Lab. The data reflects employment during the week that includes the 12th of the month, consistent with the timing used by the Bureau of Labor Statistics for its monthly jobs report.
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