The U.S. private labor market continued to expand in June, but at a slower pace than earlier this year, according to the latest ADP National Employment Report. Private employers added 98,000 jobs during the month while wage growth remained resilient, signaling a labor market that is cooling rather than contracting. The latest data points to uneven hiring across industries, persistent labor supply challenges, and continued competition for skilled workers despite softer employment growth.

Hiring across the U.S. private sector slowed in June as employers added 98,000 jobs, according to the latest ADP National Employment Report, produced by ADP Research in collaboration with the Stanford Digital Economy Lab. The report offers one of the earliest monthly snapshots of labor market conditions, drawing on anonymized payroll data from more than 26 million private-sector employees and over 15 million monthly pay observations.

The June figures represent a moderation from May’s revised gain of 122,000 jobs, reinforcing signs that the labor market is entering a more measured phase after several years of elevated hiring activity.

Despite the slowdown in payroll growth, wage increases remained relatively stable. Median annual pay gains for employees who stayed with their current employer held at 4.4%, while workers who changed jobs saw pay growth accelerate to 6.6%, suggesting employers continue to pay a premium for experienced talent in competitive sectors.

According to Dr. Nela Richardson, Chief Economist at ADP, the current labor market reflects a balance between weakening demand and ongoing labor shortages.

“The pace of hiring is telling a story of both supply and demand,” Richardson said in the report. “We know it’s taking people longer to find work, but there also are signs of labor supply constraints in certain industries.”

Hiring varied sharply across industries

The June report highlights an increasingly uneven employment landscape.

The education and health services sector generated the largest increase with 48,000 new jobs, reflecting sustained demand for healthcare professionals and education workers. Financial activities followed with 14,000 jobs, while trade, transportation, and utilities added 15,000 positions. Information services also posted healthy gains with 7,000 new jobs, suggesting continued hiring across technology-related business functions.

Goods-producing industries showed relatively modest growth overall, adding only 2,000 jobs. Manufacturing contributed 5,000 positions, construction added 2,000, while natural resources and mining declined by 5,000 jobs.

One of the weakest-performing sectors remained leisure and hospitality, which added just 2,000 jobs. The report noted that the industry has now experienced six consecutive months of subdued hiring, reflecting slower consumer demand and ongoing operational adjustments following several years of rapid workforce expansion.

Smaller businesses drove employment gains

Hiring activity was strongest among smaller employers.

Businesses with fewer than 50 employees created 53,000 jobs, accounting for more than half of all private-sector employment gains during June. Medium-sized companies added 29,000 positions, while organizations employing more than 500 workers contributed 25,000 jobs.

The figures suggest that smaller businesses continue to play a significant role in employment growth despite tighter financing conditions and broader economic uncertainty.

Regionally, the South led job creation with 37,000 new positions, followed by the Northeast with 33,000, the Midwest with 21,000, and the West with 17,000.

Wage growth remains resilient

Although hiring has moderated, compensation continues to rise at levels above historical averages.

Workers remaining with their employers received median annual pay increases of 4.4%, unchanged from May. Employees changing jobs experienced stronger wage growth of 6.6%, reinforcing the trend that job mobility continues to deliver higher salary increases.

Among industries, financial activities recorded the strongest wage growth for job-stayers at 5.1%, followed by manufacturing at 4.9% and construction at 4.6%.

Pay growth also varied by employer size. Employees at the smallest firms (1–19 workers) saw median annual increases of 2.5%, while workers at medium-sized and large organizations received pay increases approaching 4.8%, reflecting greater compensation flexibility among larger employers.

What the data means for HR leaders

For HR and workforce technology professionals, the June ADP report reinforces a growing shift from rapid hiring toward strategic workforce planning.

Rather than expanding headcount aggressively, organizations are increasingly focused on retaining skilled employees, improving productivity, and using workforce analytics to optimize hiring decisions. Human capital management platforms from vendors such as Workday, SAP SuccessFactors, Oracle, Microsoft, and UKG continue to integrate artificial intelligence into recruiting, workforce forecasting, compensation planning, and skills management.

AI-powered recruiting tools are also helping employers identify qualified candidates faster as talent shortages persist in specialized industries such as healthcare, financial services, and advanced manufacturing.

The continued wage premium for job changers highlights another challenge for HR teams: retaining experienced employees remains more cost-effective than replacing them in a competitive labor market.

Market outlook

The June report paints a picture of a labor market that is gradually normalizing rather than weakening sharply.

According to Gartner, organizations are increasingly prioritizing workforce planning, employee experience, and skills development as labor market conditions evolve. Meanwhile, McKinsey & Company has found that companies investing in workforce capability building and internal mobility are better positioned to navigate periods of slower hiring and economic uncertainty.

While overall employment growth has moderated, resilient wage gains and continued hiring in knowledge-intensive industries suggest demand for skilled talent remains intact. Enterprise HR leaders are therefore expected to continue investing in AI-enabled workforce planning, digital recruitment platforms, and employee retention strategies throughout the second half of 2026.

Market Landscape

The latest ADP data reflects broader changes across enterprise workforce management.

• Gartner identifies workforce planning and employee retention as strategic priorities as organizations shift from expansion hiring toward productivity-focused talent strategies.
• McKinsey & Company reports that organizations investing in reskilling and internal mobility outperform peers during periods of labor market normalization.
• Enterprise HR software providers—including Microsoft, Workday, SAP SuccessFactors, Oracle, and UKG—continue embedding generative AI into recruitment, compensation analysis, workforce analytics, and talent management.
• Persistent wage growth indicates that skilled talent remains competitive even as overall hiring moderates.

Top Insights

• ADP reported 98,000 new private-sector jobs in June, signaling slower but continued labor market expansion as employers adopt more measured hiring strategies.
• Wage growth remained resilient, with job-stayers receiving 4.4% annual pay increases and job-changers earning 6.6%, underscoring ongoing competition for skilled talent.
• Education and healthcare led hiring, while leisure and hospitality recorded another month of subdued employment growth, highlighting uneven sector recovery.
• Small businesses generated more than half of June’s employment gains, demonstrating their continued role in supporting U.S. labor market growth.
• HR leaders are increasingly relying on AI-powered workforce planning, recruitment technology, and analytics to navigate slower hiring and evolving talent demands.

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