U.S. private payrolls recorded a significant decline of **32,000 jobs** in November, marking the largest drop since March 2020. This downturn was primarily driven by small businesses, which shed **120,000 jobs**. In contrast, medium and large firms managed to add jobs, highlighting a mixed picture of the labor market.
Economists warn that this figure may not accurately reflect the overall health of the labor market. Recent government data indicate low levels of layoffs, suggesting that the decline reported by the **ADP** could diverge from the official numbers produced by the **Bureau of Labor Statistics** (BLS). Samuel Tombs, chief U.S. economist at **Pantheon Macroeconomics**, noted that there is often “loose correlation” between the ADP estimates and official data. He projects that the revised figures could show an increase in private payrolls between **75,000 and 100,000 jobs** for November, indicating ongoing growth.
The latest ADP report reveals that private employment fell from an upwardly revised increase of **47,000 jobs** in October. Economists surveyed by Reuters had anticipated a rise of **10,000 jobs** for November, following a previously reported rebound of **42,000**. While small establishments faced substantial job losses, medium businesses saw an increase of **51,000 jobs**, and large firms added **39,000 jobs**.
The ADP report is a collaborative effort with the **Stanford Digital Economy Lab**. The BLS is set to release its employment report for November on **December 16**, which will include nonfarm payrolls data for October. This report was delayed due to the recent U.S. government shutdown, which also affected the calculation of the unemployment rate for October.
Job losses in October were likely impacted by the departure of federal workers who accepted buyouts in September. A modest recovery was expected in November, with the economy adding **119,000 jobs** in September and the unemployment rate climbing to a four-year high of **4.4%**. First-time applications for state unemployment benefits have remained stable, aligning with a “no-hire, no-fire” sentiment among businesses, at least through the second-last week of November.
Economic uncertainty stemming from tariffs has created a stagnant labor market. A separate survey from the **Institute for Supply Management** reported a contraction in services sector employment, although the decline has been easing for four consecutive months. Respondents noted challenges in filling vacancies and a low volume of applications for positions that require in-office work.
As the **Federal Open Market Committee** prepares to meet next week to discuss interest rates, they will not have the November employment report available. Some economists suggest that the ADP report could hold more weight than usual in their deliberations, despite its known limitations. A core group of three members within the Federal Reserve’s Board of Governors advocates for rate cuts, while five voting policymakers express skepticism about further reductions.
Wall Street reacted positively to the news, with stocks trading higher and U.S. Treasury yields declining. The value of the dollar also slipped against a basket of currencies. Inflationary pressures remain a concern, as a separate BLS report indicated that import prices were flat in September, though consumer goods prices, excluding motor vehicles, rose by **0.4%** for the second consecutive month.
Prices of imports from China surged by **0.8%**, the highest increase since July 2008, while costs for Japanese imports climbed **0.7%**. In contrast, prices for Canadian imports fell **0.8%**, and goods from Mexico saw a slight decline of **0.1%**.
Christopher Rupkey, chief economist at **FWDBONDS**, emphasized that hopes for lower prices from international partners to ease tariff impacts have not materialized in recent data. The ongoing tariffs continue to constrain production, with a Federal Reserve report showing unchanged manufacturing output. Despite some sectors benefiting from increased spending on artificial intelligence, overall manufacturing activity remains subdued.
Veronica Clark, an economist at **Citigroup**, pointed out that as manufacturing focuses more on specialized sectors like computers and aircraft, the impact of restrictive rates and tariffs is expected to weigh heavily on overall manufacturing and business investment.
