Private employers added just 38,000 jobs last month, the slowest pace since January
Private hiring in the United States slowed sharply in August, with companies adding just 38,000 jobs, the weakest monthly total since January, as a labor market defined by concentrated, narrow gains showed further signs of deceleration, according to the ADP National Employment Report released Wednesday.
The figure missed the Dow Jones consensus estimate of 47,000 and fell from July's upwardly revised total of 46,000.
For mortgage professionals navigating elevated borrowing costs and a hesitant borrower pool, the data extends a troubling trend heading into Friday's official nonfarm payrolls count from the Bureau of Labor Statistics (BLS).
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Gains narrow to a handful of sectors
Education and health services led all categories with 45,000 jobs added, followed by leisure and hospitality at 16,000 and construction at 12,000.
Outside that narrow cluster, the picture was largely negative. Manufacturing shed 17,000 jobs, professional and business services fell 16,000, and natural resources and mining alongside trade, transportation, and utilities each declined 5,000.
Large employers drove the headline. Companies with 500 or more workers added 34,000 positions, while businesses with fewer than 50 employees contributed just 3,000.
Nela Richardson, chief economist at ADP, singled out manufacturing as the report's most troubling signal. "If you want to look for places of disappointment, [manufacturing] is the one I would point to," she told reporters Wednesday.
"It's kind of retreated back to its long-term job loss instead of job creation. So we're going to be watching that sector to see if this is the reversion back to a declining trend after a few months of at least a little bit of positivity."
What the miss means for the rate outlook
August's result arrives at a fraught moment. US private sector job growth had already decelerated for four consecutive weeks before today's data confirmed the pattern.
July's weaker ADP figures had already raised fresh questions about whether a September Fed hike remained in play, with the Federal Open Market Committee's next policy meeting concluding September 16. The Fed has held its benchmark rate between 3.50% and 3.75% throughout 2026.
Amir Nurani, broker-owner at Left Coast Leaders in San Diego, California, told Mortgage Professional America earlier this year that the rate trajectory carried one clear risk for brokers and their clients.
"I will come out on record and tell you that rates at the end of this year will be higher than they are today," Nurani said.
"I think that we could absolutely touch 7% again."
Pay growth held steady. Base pay for workers who stayed in their jobs rose 3% year-over-year while gross pay — including tips, commissions, and bonuses — gained 4.4%, both unchanged from July.
Friday's BLS report is forecast to show 53,000 new positions. The unemployment rate is forecast to hold at 4.1%.
A weak BLS nonfarm payrolls print on Friday could give rate-hike advocates within the Fed reason to hold back. A stronger-than-expected reading, by contrast, would harden the case for pushing rates higher before year-end.
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