Private Hiring Falls by 32,000 as Economic Uncertainty Grows/ Newslooks/ WASHINGTON/ J. Mansour/ Morning Edition/ Private sector jobs in the U.S. dropped by 32,000 in September, marking the sharpest decline in over two years, according to the ADP National Employment Report. Small and mid-sized firms drove the decline, while large businesses added jobs. The delayed government jobs report due to the shutdown has placed added focus on this weaker-than-expected ADP data.
Private Jobs Decline Quick Looks
- Private payrolls fell by 32,000 in September, per ADP
- August figures revised down to a 3,000 job loss
- Largest payroll drop since March 2023
- Small and medium businesses accounted for all job losses
- Large employers added 33,000 jobs in September
- Hiring gains limited to education, health, and information sectors
- Labor market affected by tariffs, immigration raids, and AI disruption
- Official government jobs report delayed due to shutdown
- Economists expect further Fed rate cuts amid soft labor conditions
Deep Look
U.S. Private Payrolls Decline Most in 2.5 Years as Hiring Stalls
WASHINGTON, D.C. — The American private sector shed 32,000 jobs in September, marking the biggest employment drop in over two years, according to the ADP National Employment Report released Wednesday. The figures came as a surprise to analysts and investors, who were expecting job growth despite ongoing economic headwinds.
The sharp contraction in hiring represents the most significant decline since March 2023, reflecting a labor market hampered by rising automation, restrictive immigration policies, and ongoing trade-related uncertainties.
ADP Report Gains Extra Attention Amid Shutdown
Ordinarily, the ADP jobs report receives less market attention than the official Bureau of Labor Statistics (BLS) report. However, with the federal government shut down since midnight Tuesday, the Labor Department has ceased operations — delaying Friday’s scheduled release of the more comprehensive employment data.
This shutdown-induced vacuum has made ADP’s data one of the few available labor indicators, even though it has a history of limited accuracy in predicting official payroll numbers.
“The ADP provides very little information of value,” said Oliver Allen, senior economist at Pantheon Macroeconomics. “It flagged a slowdown in hiring earlier this year, but its magnitude was overstated.”
Still, investors and economists are watching the ADP numbers closely, given the growing uncertainty around U.S. economic momentum and the Federal Reserve’s next move on interest rates.
Sector Breakdown: Who’s Hiring — and Who Isn’t
The report showed job losses were concentrated entirely in small and medium-sized businesses, while large firms added 33,000 jobs in September.
Among industries:
- Education and health services added jobs
- The information sector also posted gains
- Other sectors, including retail, construction, and manufacturing, saw flat or negative hiring trends
Economists expected private employment to increase by 50,000 in September, following the previously reported 54,000 job gain in August. But those August numbers were revised downward to a loss of 3,000, amplifying concern that hiring is cooling faster than previously thought.
Underlying Pressures: Trade, Tech, and Immigration
A combination of structural and policy-driven challenges is weighing on labor demand, experts say. Chief among them are:
- Trade-related uncertainty, including tariffs on imported goods
- Rising automation and artificial intelligence, which reduce labor needs
- Immigration raids, which have cut labor supply in key sectors
“Hiring is at risk,” said Joseph Brusuelas, chief economist at RSM US, citing these pressures as major headwinds. He described the labor environment as caught in a “curious balance,” echoing earlier comments by Federal Reserve Chair Jerome Powell.
Fed Policy: More Rate Cuts Likely
In response to signs of a slowing labor market, the Federal Reserve cut interest rates by 25 basis points last month, lowering its benchmark overnight rate to a 4.00%–4.25% range. With the labor market weakening, economists expect further rate cuts could come as early as October.
Tuesday’s government data on job openings also showed a tepid market, with moderate growth in vacancies and sluggish hiring rates. The combination of stagnant employment and macroeconomic uncertainty reinforces the likelihood that the Fed will continue easing policy to stimulate demand.
Shutdown Fallout: Data Delays and Market Uncertainty
The ongoing federal government shutdown — the 15th since 1981 — has already delayed multiple key economic reports. In addition to the monthly employment report, the shutdown has:
- Postponed the August construction spending report
- Delayed the weekly jobless claims report originally scheduled for Thursday
These data gaps are contributing to a murkier economic outlook and complicating policymaking. For investors and economists, fewer data points mean more guesswork, raising the stakes of each available indicator — flawed or not.
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