Small Business Hiring Slows While Mid and Large Firms Lead
While medium and large-sized businesses each added 46,000 jobs, small firms—those with fewer than 50 employees—contributed just 12,000. This underperformance in small business hiring could indicate ongoing pressure from wage costs and tighter credit conditions. In contrast, larger firms appear more insulated and are driving the bulk of current labor market gains.
Wage Growth Holds Steady but Sector Weakness Emerges
Wages rose at an annual rate of 4.4%, in line with recent readings and supportive of continued consumer spending. However, education and health services, typically reliable contributors to job creation, lost 38,000 jobs. This marks a notable drag on an otherwise solid report and raises questions about structural labor supply or funding challenges in the sector.
ADP Data Sets Expectations for Friday’s Nonfarm Payrolls Report
ADP’s report is viewed as a lead indicator for the official Bureau of Labor Statistics data due Friday. While the two often diverge, traders will be watching for confirmation of job growth near the ADP’s level. Economists expect the BLS to show a gain of 100,000 nonfarm jobs in July, with a slight uptick in unemployment to 4.2%.
Market Forecast: Bullish Labor Sentiment Supporting Consumer-Led Sectors
With private payrolls outperforming estimates and wage growth maintaining momentum, the near-term outlook for consumer-driven sectors remains bullish. Strong hiring in leisure and financial services suggests continued resilience in discretionary spending and credit demand. Barring a surprise in the upcoming BLS data, the labor market appears poised to support modest economic growth and limit downside risks for equities tied to domestic consumption.
More Information in our ADP National Employment Report.