Private-sector hiring cooled in June, with U.S. companies adding a seasonally adjusted 98,000 jobs, according to the ADP National Employment Report released July 1. The figure fell short of economist forecasts near 110,000 to 120,000 and marked a decline from May’s 122,000, adding to signs that job creation is losing momentum ahead of the government’s more closely watched payrolls report.

Key Takeaways

• ADP reported private employers added 98,000 jobs in June, below consensus estimates and down from May’s 122,000.
• Education and health services contributed 48,000, nearly half the month’s total.
• Annual pay growth held at 4.4% for job-stayers and 6.6% for job-switchers.
• Small businesses led hiring with 53,000 jobs; natural resources and mining was the only sector to shed positions.
• The report preceded the Bureau of Labor Statistics nonfarm payrolls print, where Wall Street expected a 115,000 gain.

What the ADP Report Showed

The ADP National Employment Report, produced by ADP Research in collaboration with the Stanford Digital Economy Lab, put June private-sector job growth at a seasonally adjusted 98,000. That undershot the Dow Jones consensus of 110,000 and the Bloomberg survey median of about 120,000, and it came in below May’s unrevised 122,000, which had been the strongest monthly total since January 2025.

The composition of June’s gains was narrow. Services generated all but 2,000 of the new positions, and within that category, education and health services was the single largest contributor at 48,000 jobs, nearly half the monthly total. Trade, transportation, and utilities followed at 15,000, financial activities added 14,000, and other services contributed 8,000. Among goods-producing industries, construction gained 2,000 and manufacturing added 5,000, while natural resources and mining cut 5,000 positions, the only sector to finish June in negative territory.

By employer size, the gains tilted toward smaller firms. Establishments with fewer than 50 employees added 53,000 jobs, mid-sized companies contributed 29,000, and businesses with 500 or more added 25,000.

What the Data Signals About the Labor Market

ADP chief economist Nela Richardson framed June’s reading as evidence of a labor market caught between competing forces. She noted that it is taking people longer to find work while some industries face labor supply constraints, and said the overall effect is a slowdown in job creation. The June figure reversed the trend from May, when hiring was described as broad-based across industries and employer sizes.

On wages, the report pointed to steady but uneven pay pressure. Annual pay growth for employees who stayed in their jobs held at 4.4%, while workers who changed jobs commanded increases of 6.6%. The persistent gap between job-stayers and job-switchers has been a recurring feature of the post-pandemic labor market, reflecting the premium employers pay to attract talent even as overall hiring cools.

The composition matters as much as the headline. A labor market leaning heavily on education and health services, sectors that tend to hire regardless of the broader cycle, suggests underlying demand is thinner than a single monthly number implies. When one sector supplies nearly half the gains and a goods-producing category slips into contraction, the breadth of hiring narrows, a pattern economists watch for signs of a broader slowdown.

How the Report Fits the Fed Picture

The timing gives the ADP figure added weight. The report landed two days ahead of the Bureau of Labor Statistics nonfarm payrolls release, where the Wall Street consensus called for a gain of 115,000 and an unemployment rate holding at 4.3%. Average hourly earnings were expected to show a monthly increase of 0.3% and an annual pace of 3.5%.

Analysts caution against reading the ADP report as a direct preview of the government data. The two series correlate poorly month to month, and ADP’s count has generally undershot the official figure this year, even as the BLS report has shown mostly solid job creation. ADP is best read as its own signal rather than a payrolls forecast.

The labor data arrives at a delicate moment for monetary policy. The Federal Reserve held its benchmark rate at 3.50% to 3.75% at its June meeting, and Fed Chair Kevin Warsh reaffirmed a focus on returning inflation to the 2% target at the ECB Forum this week. Markets have been pricing in the possibility of at least one rate hike by year-end after inflation climbed to a three-year high. A cooling labor market complicates that calculus: softer hiring would ordinarily argue for caution on rate increases, but the Fed’s stated priority remains price stability, leaving policymakers to weigh a slowing jobs picture against still-elevated inflation. The market reaction to the ADP release was muted, with investors awaiting the government report.

This article is for informational purposes only and does not constitute financial or investment advice. Readers should consult a qualified financial professional before making investment decisions.

June’s 98,000 gain shows a labor market still adding jobs but doing so more slowly and less broadly, leaving the Fed to parse whether cooling hiring or persistent inflation deserves the greater weight.

Frequently Asked Questions

How many jobs did the private sector add in June? ADP reported a seasonally adjusted 98,000 private-sector jobs in June, below consensus forecasts and down from May’s 122,000.

Which sector added the most jobs? Education and health services led with 48,000 jobs, nearly half the month’s total gains.

How fast are wages growing? Annual pay growth held at 4.4% for workers who stayed in their jobs and 6.6% for those who changed jobs, according to ADP.

Is the ADP report the same as the government jobs report? No. ADP measures private payrolls and is released ahead of the Bureau of Labor Statistics report. The two series often diverge, and ADP is best read as its own signal.

What did Wall Street expect from the government report? The consensus called for a nonfarm payrolls gain of 115,000 and an unemployment rate holding at 4.3%.

How does this affect Federal Reserve policy? A cooling labor market adds complexity as the Fed weighs softer hiring against inflation running above its 2% target.