U.S. private-sector employers added 38,000 jobs in August, the slowest monthly pace of hiring since January 2026, according to the ADP National Employment Report released on September 2. The figure fell short of both the Dow Jones consensus estimate of 47,000 and the Reuters forecast of 48,000. July’s gain was revised upward to 46,000 from an initially reported 44,000. The report, produced in collaboration with the Stanford Digital Economy Lab, arrives two days ahead of the Bureau of Labor Statistics nonfarm payrolls report for August, which economists project will show a gain of 55,000 jobs after July’s contraction of 23,000.
Key Takeaways
- Private-sector employment increased by 38,000 in August, missing the 47,000 Dow Jones consensus and the 48,000 Reuters forecast; July was revised upward to 46,000 from 44,000
- Education and health services led all sectors with 45,000 jobs added; manufacturing shed 17,000 jobs and professional and business services lost 16,000
- Large businesses with 500 or more employees added 34,000 positions; small businesses with 1 to 19 employees added 20,000; mid-size small businesses with 20 to 49 employees lost 17,000
- ADP Pay Insights reported median base pay up 3.2% year-over-year for all private-sector workers; gross pay, which includes bonuses, commissions, and tips, rose 4.7%
- Job-changers saw base pay increases of 4.7% compared to 3.0% for job-stayers; gross pay for job-changers rose 7.3% versus 4.4% for those who remained in their positions
- The Bureau of Labor Statistics nonfarm payrolls report is scheduled for Friday, September 4; economists expect 55,000 jobs added after July’s 23,000 contraction
Sector Performance Split Sharply Between Services Growth and Goods-Producing Contraction
The August data reveals a labor market that is still generating jobs but doing so unevenly across industries. Service-providing businesses added 48,000 positions, carrying the entire net gain and then some. Education and health services accounted for 45,000 of those jobs, a figure that reflects the structural demand for workers in healthcare delivery, K-12 education staffing, and higher education administration heading into the fall semester. Leisure and hospitality added 16,000 jobs, financial activities contributed 6,000, and construction added 12,000.
The goods-producing side of the economy moved in the opposite direction. Manufacturing lost 17,000 jobs, continuing a pattern of contraction that has persisted through much of 2026 as elevated input costs, energy prices, and supply chain disruptions tied to the Middle East conflict have pressured margins and slowed order volumes. Professional and business services, a category that includes consulting, staffing agencies, and technology services, shed 16,000 positions. Goods-producing businesses as a whole contracted by 10,000 jobs in August.
The divergence between services and goods-producing employment is a data point that matters for small business owners operating in manufacturing, logistics, and professional services. The sectors adding jobs, healthcare and hospitality, are labor-intensive industries with persistent structural demand. The sectors losing jobs are more sensitive to credit conditions, energy costs, and business confidence, all of which the Federal Reserve’s September 2 Beige Book flagged as areas of elevated uncertainty.
Small Business Hiring Diverges by Size Band
The ADP data segments hiring by employer size, and the August numbers tell a split story for small businesses. Firms with 1 to 19 employees added 20,000 jobs, a figure that suggests the smallest employers are still finding demand sufficient to justify new hires. But mid-size small businesses, those with 20 to 49 employees, lost 17,000 positions. Businesses with 50 to 249 employees shed 3,000 jobs, and firms in the 250 to 499 range cut 16,000.
Large employers with 500 or more workers drove the majority of August’s net hiring, adding 34,000 positions. That concentration of hiring among the largest firms aligns with a pattern that has been visible throughout 2026: large employers have more capacity to absorb elevated input costs and more flexibility to restructure operations, while mid-size businesses operate with thinner margins and less room to carry headcount through periods of uncertainty.
For businesses in the 20 to 49 employee range, the 17,000-job loss is a signal worth tracking. This cohort represents companies that have moved beyond the startup phase but have not yet reached the scale where fixed overhead can be distributed efficiently across a larger revenue base. These are firms that tend to feel the effects of tightening credit conditions, rising commercial insurance premiums, and wage competition from larger employers more acutely than either the smallest sole-proprietor operations or the largest enterprise businesses.
Pay Growth Remains Positive but the Gap Between Job-Changers and Job-Stayers Continues to Widen
Beginning with the August 2026 release, ADP Pay Insights expanded its reporting to include year-over-year changes in contracted base pay rates alongside its existing gross pay data. The distinction matters because gross pay includes bonuses, commissions, tips, and overtime, all of which can fluctuate with business conditions and seasonal demand. Base pay reflects the contracted rate an employer has agreed to pay a worker, which is a more stable indicator of underlying wage dynamics.
For all private-sector workers, median base pay rose 3.2% year-over-year in August. Gross pay, which captures total compensation including variable earnings, rose 4.7%. The gap between the two figures suggests that while contracted wages are growing modestly, a meaningful portion of total pay growth is being driven by variable compensation components rather than permanent rate increases.
The spread between job-changers and job-stayers remains the most telling data point in the pay analysis. Workers who changed jobs saw base pay increases of 4.7%, compared to 3.0% for those who remained in their positions. On the gross pay side, job-changers earned 7.3% more than a year ago, versus 4.4% for stayers. That 1.7-percentage-point gap in base pay and 2.9-point gap in gross pay reflects a labor market where mobility is still being rewarded financially, but where employers are not raising wages at the same pace for their existing workforce.
ADP Chief Economist Nela Richardson framed the data in terms of the structural forces shaping hiring: demographic change, persistent inflation, and AI’s effects on jobs. Richardson noted that once-predictable wage growth patterns have been disrupted by these overlapping pressures, making traditional hiring metrics less reliable as standalone indicators of labor market health.
The Report Arrives Against a Backdrop of Conflicting Economic Signals
The ADP employment data landed on the same day the Federal Reserve released its September Beige Book, which reported that economic activity increased modestly since early July across 10 of 12 Federal Reserve districts. The Beige Book noted that employment rose very slightly overall, with five districts reporting no change in headcount, and that input cost pressures were elevated in manufacturing and construction due to energy, raw materials, and transportation costs.
The alignment between the ADP and Beige Book findings reinforces a picture of an economy that is still growing but doing so at a pace that is not generating strong job creation. For entrepreneurs and small business owners, the practical implications center on three variables: hiring is slowing, wage pressure from job-changers is not abating, and the sectors contracting, manufacturing and professional services, are ones where many mid-size businesses operate.
The NFIB Small Business Optimism Index, released on August 11, offered a somewhat more encouraging signal. The index rose 2.4 points in July to 99.8, crossing above its 52-year average of 98.0 for the first time since August 2025. Hiring plans improved substantially and were the primary driver of the index increase. However, the NFIB Uncertainty Index also rose to 91, well above its historical average of 68, suggesting that while small business owners are planning to hire, they are doing so with limited visibility into how conditions will evolve over the next two quarters.
Friday’s BLS Report Will Provide the Official Labor Market Picture
The ADP National Employment Report and the Bureau of Labor Statistics nonfarm payrolls report use different methodologies and frequently diverge in both direction and magnitude. ADP’s data is derived from anonymized weekly payroll records of its corporate clients, covering more than 26 million private-sector employees. The BLS survey covers both the private sector and government employment and uses a different sampling methodology.
Economists surveyed ahead of Friday’s BLS release expect nonfarm payrolls to show a gain of 55,000 jobs in August, a rebound from July’s contraction of 23,000. The July decline was widely attributed to seasonal adjustment noise and temporary disruptions rather than a structural shift in the labor market. If the BLS report confirms a rebound in line with expectations, the August ADP miss may be interpreted as a sector-specific softening rather than a broad labor market deterioration.
For business owners planning Q4 headcount, the ADP data suggests that the window for hiring at modest wage premiums may be narrowing in sectors where demand remains strong, while industries facing cost pressures are already pulling back. The 3.2% base pay growth figure provides a benchmark for compensation planning: employers matching or exceeding that rate are operating in line with the market, while those offering less risk losing workers to competitors willing to pay the job-changer premium that currently sits at 4.7%.
FAQs
How Many Private-Sector Jobs Were Added in August 2026?
The ADP National Employment Report recorded 38,000 private-sector jobs added in August, below the Dow Jones consensus estimate of 47,000 and the Reuters forecast of 48,000. July’s figure was revised upward to 46,000 from an initially reported 44,000. August represents the slowest pace of private payroll growth since January 2026.
Which Sectors Added the Most Jobs in August?
Education and health services led all sectors with 45,000 jobs added. Leisure and hospitality contributed 16,000, construction added 12,000, and financial activities added 6,000. Service-providing industries collectively added 48,000 positions, while goods-producing businesses contracted by 10,000.
Which Sectors Lost Jobs in August?
Manufacturing lost 17,000 jobs and professional and business services shed 16,000 positions. Goods-producing businesses as a whole contracted by 10,000 jobs. The losses reflect ongoing pressure from elevated energy and input costs, tightening credit conditions, and supply chain disruptions linked to the Middle East conflict.
How Fast Are Wages Growing According to ADP?
Median base pay for all private-sector workers rose 3.2% year-over-year in August. Gross pay, which includes bonuses, commissions, and tips, rose 4.7%. Job-changers saw base pay increases of 4.7% compared to 3.0% for workers who stayed in their current positions. Gross pay for job-changers rose 7.3% versus 4.4% for job-stayers.
When Is the BLS Nonfarm Payrolls Report for August?
The Bureau of Labor Statistics is scheduled to release its nonfarm payrolls report for August on Friday, September 4. Economists expect the report to show a gain of 55,000 jobs after July’s contraction of 23,000. The BLS report covers both private-sector and government employment and uses a different methodology than the ADP report.
What Does the ADP Report Mean for Small Business Hiring?
Small businesses with 1 to 19 employees added 20,000 jobs in August, while mid-size small businesses with 20 to 49 employees lost 17,000. The divergence suggests that the smallest employers are still finding demand sufficient to hire, but firms in the growth stage between 20 and 49 employees are pulling back amid elevated costs and competitive wage pressure from larger employers.
