August Hiring Trends and Market Cooling
Private-sector employment in the United States grew by 38,000 jobs in August 2026. This figure marks the slowest pace of job creation recorded since January of the same year. The data, provided by the ADP National Employment Report in partnership with the Stanford Digital Economy Lab, highlights a cooling labor market. Large establishments with more than 500 workers drove most of the growth, adding 34,000 positions. Small firms added a modest 3,000 roles, while medium-sized businesses reported no net change.
Sector performance remained uneven across the country. Manufacturing saw a decline of 17,000 jobs. Professional and business services also contracted by 16,000 positions. Conversely, education and health services provided a strong buffer, adding 45,000 roles. Construction and leisure sectors also posted gains. The regional breakdown shows the Northeast led hiring with 38,000 new jobs, while the West region experienced a contraction of 8,000 roles during the same period.
Understanding Wage Growth and Pay Metrics
Beyond raw hiring figures, the updated ADP Pay Insights report provides a clear look at compensation trends. Base pay for all workers rose 3.2% compared to last year. Gross pay, which incorporates bonuses, tips, and other supplemental earnings, grew by 4.7%. These numbers offer a specific indicator of how employers adjust compensation to manage labor costs in a changing economy.
Job-changers continue to outpace job-stayers in earnings growth. Those who switched employers saw a 4.7% increase in base pay and a 7.3% jump in gross pay. In contrast, those who stayed in their current positions saw base pay rise by only 3.0%. Lead data scientist Liv Wang noted that wage growth has been on a downward trend for the past four years. For lower-paid employees, the momentum for base pay increases is now weaker than it was before the pandemic.
Economic Context and Future Outlook
Dr. Nela Richardson, chief economist at ADP, pointed to the choppy nature of current hiring patterns. Demographic shifts, stubborn inflation, and the integration of artificial intelligence tools are reshaping how businesses manage their staff. These factors complicate the traditional relationship between pay growth and job availability. Employers are now forced to navigate these variables when determining their staffing and salary strategies.
This monthly report relies on anonymized payroll data from more than 26 million employees. The addition of deeper geographic data and an interactive platform allows analysts to track changes across 56 metropolitan areas. As the market moves into the final quarter of 2026, economists will track these metrics to determine if the cooling in August represents a short-term dip or a more permanent shift in private-sector activity. The next report from the ADP team is scheduled for release on September 30, 2026.