The weak trend in private payrolls data reversed course in July, with new hiring bouncing back as employers grow more optimistic about the resilience of the U.S. consumer.

The ADP national employment report shows 104,000 jobs added to private payrolls in July after a downward revision to just 23,000 jobs shed in June (previously -33,000). The July increase beats the consensus of up 75,000 in the Econoday survey of forecasters. By sector, there was increased hiring within both service-providing industries as well as goods-producers.

Annual wage growth remained robust up 4.4 percent compared to July 2024.

Service-providers' payrolls are up 74,000 in July. Goods-producers' payrolls are up 31,000 in July.

Payrolls are up only for all establishments in July. Small firms (1-49 employees) added 12,000 jobs, medium firms (50-499) +46,000, and large firms (500+) also +46,000.

The ADP pay insights report noted that the median annual increase for pay for job-stayers is up 4.4 percent from July 2024. For job-changers, the July year-over-year increase is 7 percent. This is up from 6.8 percent in June.

The consensus sees private payrolls up by a modest 75K in July after falling 33k in June.

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.