ADP Report: Private Sector Cuts 32,000 Jobs in November, Fed Rate Cut Expectations Rise
The ADP employment report shows that the U.S. private sector saw a net loss of 32,000 jobs in November, with small businesses cutting 120,000 jobs and large businesses adding 90,000. Wage growth slowed, with pay increases for job switchers falling to 6.3%. Federal Reserve officials are divided over whether to cut rates at next week's policy meeting, with market expectations for a rate cut rising to 89%.
Key Points
- U.S. private sector employers cut 32,000 jobs in November, ADP data showed Wednesday, as Federal Reserve officials debate whether cooling labor market conditions are enough to support an interest rate cut at next week's policy meeting.
- ADP said small private businesses with fewer than 50 employees cut 120,000 jobs in November, while larger firms added 90,000 jobs. Pay for workers staying in their jobs rose 4.4% year over year, down 0.1 percentage point from October; pay for job switchers rose 6.3%, down 0.4 percentage point from the prior month.
- "Hiring activity has been volatile recently as businesses navigate cautious consumer spending and an uncertain macroeconomic environment," ADP Chief Economist Nela Richardson said in a statement.
In-Depth Analysis
Over the past week, interest rate futures traders have raised the probability of a 25-basis-point rate cut by the Fed next week from 83.4% to 89%, according to the CME FedWatch tool. The current federal funds rate target range is 3.75% to 4%.
Some Fed officials have pointed to a bleak employment outlook and called for a third consecutive cut in borrowing costs at the December 9-10 meeting. Other central bank officials have emphasized that inflation remains well above the Fed's 2% target, favoring holding the key interest rate steady to avoid a resurgence in price pressures.
At the most recent central bank policy meeting in October, participants "expressed strong divergence on what policy decision would be most likely at the Committee's December meeting," according to minutes released on November 19.
The Fed's 12 regional banks noted a softening in labor market conditions in their so-called "Beige Book" report last week. "Employment was little changed over the reporting period, with about half of the districts reporting weaker labor demand," the summary of regional reports said. "While layoff announcements increased, more districts reported that firms were managing headcounts through restricted hiring, hiring freezes, replacement-only hiring, and attrition rather than outright layoffs."
ADP's November employment report drew unusual attention because the 43-day federal government shutdown delayed the release of official employment data. The Bureau of Labor Statistics has postponed the November jobs report by more than three weeks, to December 16, six days after the policy meeting concludes.
Other unofficial labor market indicators have also deteriorated in recent weeks. "Expectations for labor market conditions in mid-2026 remain notably pessimistic," the Conference Board said on November 25, describing results from its monthly consumer confidence survey. Only 27.6% of consumers said jobs were "plentiful," down 1 percentage point from October.
Among small business owners, 56% reported in October that they were hiring or trying to hire, down 2 percentage points from the prior month, the National Federation of Independent Business said last month.