The U.S. labor market showed an unexpected contraction in November as private payrolls decreased by 32,000 jobs, according to the latest ADP National Employment Report released on Wednesday. Economists had anticipated a modest increase of 10,000 jobs, following October’s upwardly revised gain of 47,000 positions.

Overview of ADP Employment Report

The ADP report, produced jointly with the Stanford Digital Economy Lab, provides a monthly estimate of private sector employment. Historically, ADP’s numbers sometimes diverge from the government’s official private payroll counts released by the U.S. Bureau of Labor Statistics (BLS). Nevertheless, the ADP data often serves as an early indicator of trends in the broader U.S. labor market.

The unexpected decline in private employment contrasts with September’s gains, when the economy added 119,000 jobs and the unemployment rate rose to a four-year high of 4.4%. Economists suggest that ongoing economic uncertainty—driven in part by global trade tensions and tariff policies—may have contributed to the slowdown in hiring.

Upcoming BLS Employment Data

The BLS will release its closely watched employment report for November on December 16, delayed from its original December 5 schedule due to the recently ended government shutdown. This report will provide insights into nonfarm payrolls, which include both private and public sector employment, offering a comprehensive view of the U.S. labor market.

Due to the shutdown, the unemployment rate for October was never calculated, as the household survey data could not be collected. Economists note that this missing data has left analysts relying on private payroll reports, like ADP, for early indications of labor market trends.

Labor Market Trends and Implications

While ADP’s data suggests a weakening in private sector hiring, first-time unemployment claims remain relatively stable, supporting the narrative of a “no hire, no fire” labor market. Analysts argue that businesses are cautious about expanding payrolls amid persistent economic uncertainty.

The slowdown in private payroll growth may influence Federal Reserve policy decisions regarding interest rates, as employment trends are a key indicator of economic strength. A declining job market could reduce pressure on inflation but may signal potential challenges for consumer spending and overall economic growth.