America’s private employers added only 54,000 jobs in August, much lower than economists’ already modest expectations of 68,000, according to payroll processor ADP’s latest National Employment Report, released Wednesday. The number marks a steep slowdown from July’s upwardly revised 106,000, underscoring how fragile employment momentum has become halfway through 2025.
“The year started with strong job growth, but that momentum has been whipsawed by uncertainty,” Nela Richardson, ADP’s chief economist, said in the press release.
She cited a mix of factors that are weighing on hiring decisions, “including labor shortages, skittish consumers, and AI disruptions.”
ADP’s August report is among the first to name-check AI disruptions, a rare admission that artificial intelligence is now beginning to reshape hiring sentiment.
The top-line figure hides stark divides across the economy. Almost all of August’s gains came from leisure and hospitality, which added 50,000 positions, and construction, which grew by 16,000. Once those categories are stripped, private payrolls came out essentially flat, with job losses in manufacturing (-7,000), health and education (-12,000), and trade, transportation, and utilities (-17,000).
Regionally, the South managed to add only 4,000 jobs, while the Mountain West actually shed 4,000. The Northeast and Midwest carried more of the month’s growth, reversing the usual pattern: The Sunbelt and South broadly have boosted U.S. employment recovery since the pandemic.
Wage growth, meanwhile, showed signs of cooling but remained stronger for job-switchers. Pay for job-stayers rose 4.4% year over year in August, while job-changers’ ticked up 7.1%—this premium is persistent from previous months, though not materially higher than other months.
August’s sluggish private‑sector hiring has added new fuel to the expectation that the Fed will ease monetary policy at its Sept. 16–17 meeting. Markets are now pricing in a nearly 90%–98% probability of a 25‑basis‑point rate cut, with some analysts even entertaining the possibility of a 50-basis-point cut if job growth stays weak.
The ADP’s job growth report comes just a day before the Bureau of Labor Statistics (BLS) releases its own, much anticipated review of the labor market on Sept. 5. Last month’s BLS report set off political drama after large data revisions caused President Donald Trump to fire the head of the bureau and install a friendlier Heritage Foundation economist, E.J. Antoni.
Antoni has been a vocal critic of the BLS, even suggesting days before his nomination that the bureau suspend its release of the jobs report until they publish “more accurate” data.
The ADP figures are increasingly valuable in the context of upheaval at BLS, given that they represent the most prominent alternative measure of U.S. employment.