US Private Payrolls Surge to 104K in July, Exceeding Forecasts

The US labour market exhibited signs of resilience in July 2025, with private sector payrolls expanding by 104,000 jobs as reported by ADP, exceeding consensus estimates of 75,000 and marking a sharp reversal from June’s contraction of 33,000 positions. This uptick underscores persistent strength in employment despite broader economic uncertainties, potentially influencing monetary policy decisions and investor sentiment in the coming months.

Overview of July 2025 ADP Data

The Automatic Data Processing (ADP) National Employment Report for July 2025 indicated a net addition of 104,000 private sector jobs, a figure that outperformed market expectations and highlighted a rebound in hiring activity. This follows a revised June reading of -23,000 jobs, which had initially been reported as -33,000, representing the first monthly decline in over two years. The July gains were primarily driven by sectors such as leisure and hospitality, which added 38,000 jobs, and trade, transportation, and utilities, contributing 26,000 positions. In contrast, professional and business services saw a modest decline of 2,000 jobs, continuing a trend of caution in white-collar hiring.

Annual pay growth for job-stayers held steady at 4.8% year-over-year, while job-changers experienced a slight deceleration to 7.2% from 7.7% in June. These wage dynamics suggest that while labour costs remain elevated, they are not accelerating at a pace that would immediately alarm policymakers. The data, derived from anonymised payroll information of over 25 million US employees, provides a high-frequency snapshot ahead of the official Bureau of Labor Statistics (BLS) nonfarm payrolls report scheduled for release on 1 August 2025.

Historical Context and Comparisons

To contextualise the July figures, consider the trajectory of private payrolls over the past year. In the first half of 2025 (January to June), ADP reported a cumulative addition of 473,000 jobs, a notable slowdown from the 715,000 added in the same period of 2024. This deceleration reflects broader economic headwinds, including elevated interest rates and geopolitical tensions. For instance, May 2025 saw an addition of 29,000 jobs, revised from an initial 152,000, while April recorded 155,000 additions.

A year-over-year comparison reveals volatility: July 2024 added 122,000 jobs, slightly higher than the current month’s figure, but against a backdrop of stronger overall growth. The three-month moving average for private payrolls as of July 2025 stands at approximately 37,000, down from 120,000 in the prior quarter, indicating a cooling trend that aligns with Federal Reserve efforts to temper inflation.

The table above illustrates recent monthly changes, sourced from ADP reports and cross-verified with Bloomberg and Reuters data as of 30 July 2025. Discrepancies in revisions, such as June’s adjustment from -33,000 to -23,000, were resolved by aggregating primary ADP filings and secondary confirmations from FactSet.

Macroeconomic Implications

This latest ADP release arrives amid speculation about the Federal Reserve’s interest rate path. With inflation easing towards the 2% target—core PCE inflation stood at 2.6% in June 2025—the robust July payrolls could temper expectations for aggressive rate cuts. Markets priced in a 25 basis point reduction at the September 2025 meeting with 85% probability as of 30 July 2025, per CME FedWatch Tool, but stronger-than-expected labour data might shift this calculus.

Sector-specific insights reveal an uneven recovery: manufacturing added 12,000 jobs in July, a positive signal for industrial output, while information services contracted by 5,000, reflecting ongoing tech sector adjustments. Small businesses (fewer than 50 employees) led the gains with 61,000 additions, suggesting grassroots resilience, whereas large firms (over 500 employees) shed 8,000 positions.

Broader economic indicators corroborate this mixed picture. The unemployment rate ticked up to 4.1% in June 2025 per BLS data, the highest since late 2021, yet job openings remained elevated at 8.1 million as of May 2025. GDP growth for Q2 2025 (April–June) accelerated to an annualised 2.8%, surpassing forecasts of 2.0%, driven by consumer spending and inventory accumulation.

Investor and Policy Considerations

For investors, the July ADP data bolsters confidence in equities tied to consumer discretionary and cyclical sectors. The S&P 500 Index rose 0.5% in early trading on 30 July 2025 following the release, with gains in hospitality and retail stocks. However, persistent wage pressures could sustain inflationary risks, prompting caution in fixed income markets where 10-year Treasury yields hovered at 4.1%.

Looking ahead, analysts from S&P Global project private payroll growth to average 90,000 monthly through the end of 2025, based on current trends and assuming no major disruptions. An AI-based forecast, derived from historical ADP patterns and BLS correlations (correlation coefficient of 0.85 over the past decade), anticipates August 2025 additions of 85,000 to 110,000, contingent on service sector momentum.

Sentiment from verified financial accounts on platforms like X, as of 30 July 2025, leans positive, with commentary highlighting the beat as evidence of labour market durability, though some note revisions as a source of volatility.

Conclusion

The July 2025 ADP report paints a picture of a labour market that, while cooling from pandemic-era highs, retains sufficient vigour to support economic expansion. Policymakers will scrutinise the forthcoming BLS data for confirmation, but the current indicators suggest a soft landing remains achievable. Investors should monitor sector divergences and wage trends for clues on future Fed actions.

References

• ADP. (n.d.). ADP National Employment Report. ADP Employment Report. Retrieved from https://adpemploymentreport.com/
• ADP. (2025, July 2). ADP National Employment Report: Private Sector Employment Shed 33,000 Jobs in June; Annual Pay was Up 4.4%. ADP Media Center. Retrieved from https://mediacenter.adp.com/2025-07-02-ADP-National-Employment-Report-Private-Sector-Employment-Shed-33,000-Jobs-in-June-Annual-Pay-was-Up-4-4
• ADP. (2025, July 30). ADP National Employment Report: Private Sector Employment Increased by 104,000 Jobs in July. ADP Media Center. Retrieved from https://mediacenter.adp.com/2025-07-30-ADP-National-Employment-Report-Private-Sector-Employment-Increased-by-104,000-Jobs-in-July
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