Unites States private-sector employment unexpectedly contracted in November, with Automatic Data Processing (ADP) Research reporting a decline of 32,000 jobs as small businesses bore the brunt of the losses.
ADP’s estimate for November private employment fell by 32,000, versus market expectations for an increase of 10,000. The figure represented a reversal from October’s upwardly revised addition of 47,000 positions.
The weakness was concentrated among smaller firms. ADP said establishments with fewer than 50 employees recorded a collective decline of 120,000 jobs, including a fall of 74,000 among companies employing 20 to 49 workers. By contrast, larger businesses, defined by ADP as firms with 50 or more employees, reported a net increase of 90,000 workers.
Sectoral results were mixed. Education and health services led gains with 33,000 hires and leisure and hospitality added 13,000.
However, those increases were swamped by broad-based declines elsewhere.
Professional and business services recorded the largest single-sector loss, with a drop of 26,000. Information services shed 20,000 positions, manufacturing fell by 18,000, and both financial activities and construction each saw declines of 9,000.
Wage growth also moderated. ADP reported that year-on-year pay for workers who remained in their jobs rose 4.4%, a slowdown of 0.1 percentage point from October’s pace.
ADP’s chief economist, Dr. Nela Richardson, said: “Hiring has been choppy of late as employers weather cautious consumers and an uncertain macroeconomic environment. And while November's slowdown was broad-based, it was led by a pullback among small businesses.”
The report arrives ahead of the Federal Reserve’s policy meeting on 9-10 December and is the final private-sector snapshot the central bank will receive before that gathering.
According to the CME Group FedWatch Tool, markets are indicating an 89% probability of another quarter percentage point cut to the Fed’s key interest rate.
Commerce Secretary Howard Lutnick denied on CNBC’s “Squawk on the Street” that the Trump administration’s tariff policies were responsible for the surprise decline.
Mr Lutnick argued that the recent government shutdown had temporarily slowed small-business activity and that recent federal efforts to deport undocumented immigrants also weighed on jobs numbers.
“No, no, it’s not tariffs,” Lutnick said when asked whether President Donald Trump’s import duties explained Wednesday morning’s report from ADP, which revealed an unexpected 32,000-worker drop in the labour market.
“Remember, you had the Democratic shutdown, right? And what do you think happens to small business? The people who do business with the U.S. government, they know they’re not getting paid, so they sort of slow down their projects.”
“So you saw a little bit, even, of construction small business down. So the Democratic shutdown hurt the numbers,” he said. “And then, remember, as you deport people, that’s going to suppress private job numbers of small businesses.”
Within the Federal Reserve, policymakers have signalled divergent views in recent weeks. Some officials have indicated cuts are needed to pre-empt further labour-market strains, while others have cautioned that additional easing risks rekindling inflation, which remains well above the Fed’s 2% target.
Market participants will also be watching the Bureau of Labor Statistics’ much broader nonfarm payrolls report, which the BLS is scheduled to publish on 16 December following a delay related to the government shutdown.
