Private employers added just 38,000 jobs in August, the weakest monthly gain since January, as large companies accounted for most hiring and manufacturing and professional services shed positions ahead of the government’s closely watched jobs report.
By yourNEWS Media Newsroom
U.S. private-sector hiring slowed sharply in August, with employers adding only 38,000 jobs as the labor market continued to show signs of uneven growth, restrained hiring and wide differences among industries and company sizes.
The latest ADP employment report, released Sept. 2, showed private payroll growth declining from an upwardly revised 46,000 jobs in July.
Economists had expected an increase of approximately 47,000.
The August reading was the weakest monthly private-sector employment gain since January, although payroll growth has remained positive throughout 2026.
Hiring accelerated earlier in the year before beginning to lose momentum during the spring and summer, leaving the labor market in what ADP describes as a period of “choppy hiring.”
The slowdown was not distributed evenly across the economy.
Education and health services generated by far the largest increase, adding 45,000 jobs during August.
Leisure and hospitality followed with 16,000 additional positions, while construction added 12,000 and financial activities increased employment by 6,000.
Health services have provided a substantial portion of U.S. employment growth during the past two years, in part because an aging population continues to increase demand for medical care and related services.
The rebound in leisure and hospitality employment also offered a potentially encouraging signal after weakness in the sector following FIFA World Cup activity.
The Bureau of Labor Statistics reported that leisure and hospitality employment fell by 40,000 jobs in July.
Other industries moved in the opposite direction during August.
Manufacturing payrolls declined by 17,000 jobs, according to ADP, while professional and business services cut 16,000 positions.
The overall increase was also heavily concentrated among the country’s largest employers.
Businesses with 500 or more employees added 34,000 jobs, accounting for the overwhelming majority of net private-sector hiring during the month.
Small companies with fewer than 50 workers added only 3,000 jobs.
The disparity between large and small employers adds another layer to the labor market’s increasingly fragmented picture, with overall payroll growth remaining positive even as some industries and smaller businesses show limited appetite for expanding their workforces.
ADP Chief Economist Nela Richardson said wage trends provide important context for understanding the uneven hiring environment.
“To understand hiring patterns, you have to look deeply into where pay growth is accelerating, where it’s slowing, and for whom,” Richardson said in a statement.
“Once-predictable wage growth has been overtaken by the complexities of demographic change, persistent inflation, and AI’s effects on jobs.”
Despite weaker hiring, wage increases remained relatively stable in August.
Base pay across the private sector rose 3.2% from a year earlier, while gross pay increased at a 4.7% annualized rate.
Workers who remained with their employers saw base pay increase 3% year over year.
Those who changed jobs recorded considerably stronger gains, with base pay increasing 4.7% from a year earlier.
The continuing gap between job-stayers and job-changers suggests workers who move between employers can still command stronger pay increases even as overall hiring has cooled.
The ADP report arrives two days before the Bureau of Labor Statistics is scheduled to release its August employment report on Sept. 4.
Economists expect the government report to show that the U.S. economy added approximately 58,000 jobs during August.
That would represent a rebound from the 23,000-job decline reported for the previous month.
The unemployment rate is expected to remain unchanged at 4.1%.
Financial markets are watching the report closely because another decline in payrolls could intensify concerns that the labor market is deteriorating more rapidly than previously believed.
Jay Woods, chief market strategist at Freedom Capital Markets, said investors are particularly focused on avoiding a second consecutive negative payroll reading or an abrupt increase in unemployment.
“The one thing [Wall] Street needs to avoid is another negative payroll print or a sharp rise in unemployment that suddenly raises recession concerns,” Woods said in a note emailed to The Epoch Times.
“The hope is for modest job creation, stable unemployment, and contained wage growth.”
Other employment data continue to portray a labor market characterized by relatively few layoffs but also restrained hiring.
The Bureau of Labor Statistics released its July Job Openings and Labor Turnover Survey, known as JOLTS, on Sept. 1.
Job openings increased slightly to nearly 7.3 million.
Hiring and separations were little changed, reinforcing the description of the current environment as “low-fire, low-hire.”
Under that pattern, employers are generally reluctant to dismiss existing workers but are also cautious about adding significant numbers of new employees.
Additional labor-market indicators are scheduled before the government’s monthly jobs report.
Data on planned layoffs and weekly unemployment claims will be released one day before the Sept. 4 payroll report.
Taken together, the figures could influence expectations surrounding the Federal Reserve’s Sept. 15-16 Federal Open Market Committee meeting.
Investors have again begun pricing in the possibility that the central bank could raise interest rates at that meeting, according to the CME FedWatch Tool.
Inflation remains a central concern for policymakers.
“Listening to the Fed talk, there are still concerns about inflation,” Edward Rosenberg, head of ETFs at Strategy Shares, said in a note emailed to The Epoch Times.
The Federal Reserve’s preferred inflation measure, the personal consumption expenditures price index, remains firmly above 3%.
Attention will also turn to next week’s consumer price index report.
The 12-month headline inflation rate is expected to remain above 3%, while core inflation, which excludes food and energy, is projected to remain at 2.4%.
Energy prices have become especially important to the Fed’s policy calculations because oil has risen sharply amid the continuing Iran conflict.
“At the Fed’s last meeting (July 29), officials specifically cited uncertainty from the Iran conflict as a reason for holding rates steady. Inflation and oil are directly linked in the Fed’s own reasoning,” Rosenberg said.
The central bank must therefore weigh an increasingly mixed labor market against inflation that remains above target and energy prices elevated by geopolitical instability.
U.S. crude oil is trading at approximately $90 per barrel on the New York Mercantile Exchange, while Brent crude, the international benchmark, is near $95 in overseas trading.
A major oil-price shock traditionally complicates the case for higher interest rates because tighter monetary policy can further weaken economic activity while doing relatively little to increase global energy supplies.
That leaves policymakers facing competing signals heading into the September meeting.
August’s ADP report shows private employers are still adding workers, but at the slowest rate since the beginning of the year. At the same time, layoffs remain comparatively limited, job openings are still near 7.3 million and wage growth continues.
The next test will come Friday, when the government’s August payroll figures provide a broader reading of whether the slowdown represents another month of subdued hiring or a more significant weakening of the U.S. labor market.
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