US private sector adds 104,000 jobs in July

Private businesses in the United States added 104,000 jobs in July 2025, marking the strongest monthly increase since March and significantly exceeding market expectations of a 75,000 gain.

The upbeat report followed a downwardly revised loss of 23,000 jobs in June, offering a sign that labor market momentum may be regaining traction after a temporary soft patch. The data, released by ADP, suggests that while hiring has moderated from the red-hot pace of previous years, underlying demand for labor remains resilient amid ongoing economic uncertainties and shifting monetary policy expectations.

The bulk of the July job gains came from the service-providing sector, which added 74,000 positions. Within this category, leisure and hospitality led the way with a robust 46,000 increase, pointing to sustained consumer demand for travel, dining, and entertainment services during the summer season.

Financial activities posted an encouraging 28,000 new jobs, reflecting healthy activity in banking, insurance, and real estate sectors. Trade, transportation, and utilities also recorded a solid 18,000-job gain, likely driven by summer retail activity and modest strength in logistics.

However, the report also revealed pockets of weakness: the education and health services sector, typically a steady contributor to job growth, unexpectedly lost 38,000 positions—the steepest decline in the category since early 2021—raising questions about hiring bottlenecks, sector-specific disruptions, or data volatility.

Meanwhile, the goods-producing sector added a healthy 31,000 jobs, underscoring continued demand for labor in core industries despite higher borrowing costs and softening global demand. Construction led with 15,000 new jobs, buoyed by infrastructure projects and residential developments in some regions.

Natural resources and mining added 9,000 jobs, reflecting modest improvement in energy and commodity markets, while manufacturing posted a 7,000-job increase, signaling tentative strength despite broader headwinds in industrial production.

The report also highlighted continued robustness in wage growth. Year-over-year pay gains in July held steady at 4.4% for job-stayers and 7.0% for job-changers, both unchanged for the fourth straight month. This stability in wage growth suggests that while the labor market is not overheating, it remains tight enough to support solid income gains—potentially reinforcing inflation pressures, particularly in the services sector.

However, the persistent gap between pay growth for job-changers and job-stayers also reflects ongoing labor churn and competition for skilled workers in certain industries.

Overall, the July employment figures point to a labor market that is gradually normalizing but still displaying considerable strength across multiple sectors. The data may give the Federal Reserve additional confidence in the economy’s resilience ahead of its upcoming policy decision, while also complicating the path toward a more dovish rate stance in the near term.