By Andrew Moran
U.S. private sector payrolls unexpectedly declined in November, pointing to a sluggish labor market in the home stretch of 2025, new ADP data released on Dec. 3 show.
Private businesses eliminated 32,000 positions last month, following an increase of 47,000 jobs in October, according to the payroll processor’s National Employment Report.
The recent numbers continued the trend of slowing job creation in the second half of 2025, says Nela Richardson, chief economist at ADP.
“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,” Richardson said in a news release.
Small businesses—with the number of employees ranging between 1 and 49—lost 120,000 jobs.
Conversely, mid-sized and large companies registered net gains of 51,000 and 39,000 new jobs, respectively.
Across industries, employment declines were broad-based, led by professional and business services (down 26,000), information (down 20,000), and manufacturing (down 18,000). Construction and financial activities each posted losses of 9,000 jobs.
Education and health services, meanwhile, added 33,000 jobs. Leisure and hospitality payrolls climbed by 13,000.
Wage gains also eased last month.
Year-over-year pay growth slowed to 4.4 percent from 4.5 percent in the previous month, while job changers saw their pay slow to 6.3 percent from 6.7 percent.
This week would usually bring a flurry of Bureau of Labor Statistics data points, including the Job Openings and Labor Turnover Survey and the monthly non-farm payrolls report. But with the government shutdown delaying publication, those releases have been pushed back.
The September and October job openings data are now scheduled for Dec. 9, while the October and November payrolls reports will follow on Dec. 16.
Still, the weekly jobless claims and Challenger’s monthly layoffs will be released on Dec. 4.
What This Means for the Fed
ADP’s private payrolls data will be the last comprehensive snapshot of the U.S. labor market before the Federal Reserve convenes its two-day policy meeting on Dec. 9 and 10.
The futures market is penciling in an almost 90 percent chance of a quarter-point interest rate cut to the benchmark federal funds rate—a key policy rate that influences borrowing costs for businesses and households—according to the CME FedWatch Tool.
Despite investors pricing in a rate cut, there is a divergence of views on what should happen at this month’s meeting, with minutes from the October meeting highlighting a sharp divide over the path of monetary policy.
Fed Governor Christopher Waller supports another 25-basis-point rate cut at the December Federal Open Market Committee (FOMC) meeting.
“With underlying inflation close to the FOMC’s target and evidence of a weak labor market, I support cutting the Committee’s policy rate by another 25 basis points at our December meeting,” Waller said in prepared remarks overseas on Nov. 17.
“For reasons I have explained, I am not worried about inflation accelerating or inflation expectations rising significantly.”
His colleague, Fed Gov. Stephen Miran, has advocated a faster approach to reaching a neutral policy stance, meaning the federal funds rate is neither restrictive nor accommodative.
In a Nov. 25 interview with Fox Business, Miran defended his position for a half-point rate cut, warning that current monetary policy conditions are “holding the economy back.”
“I think the economy calls for large interest rate cuts to get monetary policy to neutral as quickly as we can. Monetary policy is exerting restriction on the economy. It’s holding the economy back. It’s pushing the unemployment rate gradually upward,” Miran stated.
“And I don’t think that’s appropriate given the economic outlook,” he added. “So I think it’s the right thing to cut interest rates rather quickly.”
Meanwhile, Boston Fed President Susan Collins does not see any urgency to pull the trigger on three consecutive rate cuts next week.
“There’s some reasons why I’m hesitant,” Collins told CNBC’s “Squawk Box” last month, indicating elevated inflation, accommodative financial conditions, and a labor market that remains intact.
“I think we need to balance what the different risks are.”
For months, monetary policymakers and economic observers have pointed to the current “low firing, low hiring” climate. Real-time indicators suggest conditions remain the same.
The real-time unemployment rate forecast, according to the Chicago Fed’s biweekly report, was 4.4 percent in November, down from 4.5 percent in October. The hiring rate for unemployed workers ticked up to 44.7 percent, from 44.6 percent. The rate of layoffs and other separations was little changed at 2.09 percent.
Should sticky inflation risks persist heading into 2026, the key question is how to craft monetary policy, says David Miller, chief investment officer and senior portfolio manager at Catalyst Funds.
“I think the real risks to the market are, conceptually, similar to what happened in 2022—if inflation gets out of control and the Fed has to act to curb it at the expense of the economy, that’s where problems arise. But nobody is talking about imminent rate hikes,” Miller said in a note emailed to The Epoch Times.
“The real questions are whether rates will stay the same or be cut.”
