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Private-sector employers shed 32,000 jobs in September, according to payroll processor ADP, signaling a sharp and unexpected slowdown in the U.S. labor market as the government shutdown delays official data releases.
The report, released Wednesday, showed the first monthly decline in private payrolls since early 2023. Economists surveyed by Wall Street had anticipated a gain of 45,000 jobs, underscoring the surprising weakness in hiring as businesses face tighter financial conditions and slowing demand.
“This month’s release further validates what we’ve been seeing in the labor market — that U.S. employers have been cautious with hiring,” said Nela Richardson, ADP’s chief economist. “Despite the strong economic growth we saw in the second quarter, the trend is clear: hiring momentum continues to fade.”
Shutdown halts government jobs data
ADP’s report could be the only snapshot of the labor market available this week. The Bureau of Labor Statistics (BLS), which publishes the official monthly employment report, is shuttered due to the ongoing federal government shutdown, leaving economists without the usual data on job creation, unemployment, and wage growth.
The unexpected decline in private payrolls comes despite other recent data — including gross domestic product growth and unemployment claims — suggesting modest resilience in the broader economy.
Small businesses hit hardest
The job losses were concentrated among small and mid-sized companies, ADP said.
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Firms with 20–49 employees cut 21,000 jobs.
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Businesses with fewer than 19 workers shed 19,000 jobs.
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Larger companies with more than 500 employees were the only group to post net gains in hiring.
ADP attributed part of the weakness to recently revised BLS data, noting that while the adjustments affected levels, “the trend was unchanged; job creation continued to lose momentum across most sectors.”
The company also revised August’s figures from a gain of 54,000 jobs to a loss of 3,000, reinforcing the picture of a cooling labor market.
Wage growth slows for job changers
Wage growth also showed signs of moderation.
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Pay gains for job changers slowed to 6.6% in September, down from 7.1% in August.
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For job stayers — employees remaining in the same position — pay growth remained steady at 4.5%, outpacing current inflation rates.
Sectors losing momentum
ADP reported that job losses were widespread across industries, with the sharpest declines seen in leisure and hospitality, professional and business services, and financial activities.
Companies in trade, transportation and utilities also saw notable job cuts.
The weak report adds to signs that the post-pandemic labor recovery may be reaching its limits, as higher borrowing costs and business uncertainty weigh on hiring decisions.
Economists say Friday’s government employment report — if it were not delayed by the shutdown — would likely have confirmed the softening trend.
