The ADP national employment report puts private payroll growth at 324,000 in July, down from 455,000 in June. Although June's level was revised lower, it is still a substantial increase. The July reading is well above the consensus of 185,000 in the Econoday survey of forecasters. Overall, private payrolls are seeing solid gains with only a few pockets of weakness.

Among goods-producers, payrolls are up 21,000 in July. Natural resources/mining add 48,000 workers and construction 9,000, while manufacturing payrolls are lower by 36,000.

Service-providers' payrolls rose 303,000 in July. Nearly two-thirds of those jobs are a rise of 201,000 in leisure/hospitality where the summer months appear to be drawing out consumers to travel and entertainment venues. The only service provider to decrease is the 5,000 dip in payrolls for financial activities.

Hiring has decisively shifted in favor of smaller companies that have been plagued by a competitive disadvantage at a time when labor is in short supply. However, the imbalance in available labor appears to be easing. In July, small establishments (1-49 workers) add 237,000 to payrolls, medium establishment (50-499) add 138,000 employees, and large establishments (500+), cut 67,000 jobs.

Companies are getting some relief from the escalation of employee wages and salaries. For job-stayers, the median year-over-year increase in July is 6.2 percent, the lowest since 6.2 percent in November 2021. For those changing jobs, the median year-over-year increase is 10.2 percent, the lowest since 9.9 percent in July 2021.

Forecaster see ADP's July employment number at 185,000. This would compare with June growth in private payrolls reported by the Bureau of Labor Statistics of 149,000. ADP's number for June was way off at 497,000.

The national employment report from Automated Data Processing Inc. is computed from ADP payroll data and offers advance indications on the U.S. workforce. ADP's data cover more than 500,000 companies totaling more than 25 million employees. The report is produced by ADP Research Institute in collaboration with Stanford Digital Economy Lab.

Market players have become accustomed to the excitement on employment Friday and realize the rich detail of the monthly employment situation can help set the tone for the entire month. While economists have improved their nonfarm payroll forecasts over the years, it is not unusual to see surprises on employment Friday. To that end, the ADP's national employment report can help improve the payroll forecast by providing information in advance of the employment report.

The employment statistics also provide insight on wage trends, and wage inflation is high on the list of enemies for the Federal Reserve. Fed officials constantly monitor this data watching for even the smallest signs of potential inflationary pressures, even when economic conditions are soggy. If inflation is under control, it is easier for the Fed to maintain a more accommodative monetary policy. If inflation is a problem, the Fed is limited in providing economic stimulus.

By tracking jobs, investors can sense the degree of tightness in the job market. If wage inflation threatens, it's a good bet that interest rates will rise; bond and stock prices will fall. No doubt that the only investors in a good mood will be the ones who watched the employment report and adjusted their portfolios to anticipate these events. In contrast, when job growth is slow or negative, then interest rates are likely to decline - boosting up bond and stock prices in the process.