ADP reports U.S. private sector loses 32,000 jobs in November downturn

In a surprising twist for the U.S. job market, private sector employers reduced their workforce by 32,000 positions in November, according to a report released by payroll processor ADP on Wednesday. This decline starkly contrasts with the expectations of economists surveyed by Dow Jones, who had predicted a rise of 40,000 jobs.

ADP's chief economist, Nela Richardson, labeled November's employment figures as indicative of a "slowdown" that impacted a broad range of sectors. "The drop was led by a pullback among small businesses," Richardson explained.

Notably, small businesses with fewer than 50 employees bore the brunt of the contractions, shedding an alarming 120,000 jobs. Meanwhile, although hiring slowed, medium and large companies managed to add a small number of new positions.

"There would have been a net increase in hiring, but it is those mom-and-pop, Main Street companies, firms, small businesses and establishments that are really weathering what is an uncertain macro environment and a cautious consumer,” Richardson articulated during a media call.

Industries such as professional and business services, manufacturing, and information services were among the hardest hit in November.

However, there was a silver lining in the natural resources and mining sector, which expanded with the addition of 8,000 jobs. Richardson attributed this growth to significant infrastructure investments, particularly in data centers that are heavily resource-dependent.

The ADP report emerges against a backdrop of limited data from the government due to a recent shutdown. The next federal jobs report is not expected until December 18. This contributes to growing concerns over the current state of employment, following previous federal reports that have painted a picture of an uncertain job market.

Earlier in the year, June saw a reduction of 13,000 jobs, an addition of 72,000 jobs in July, followed by a loss of 4,000 positions in August. September showed a more promising increase, with 119,000 jobs added nationwide.

ADP's monthly reports have reflected this volatility, with payroll contractions noted in four of the past six months.

"The slowdown in hiring is matched by a slowing in pay growth year over year. Pay for job stayers rose 4.4% and that's down from 4.5% in October," Richardson noted.

The government shutdown has also delayed crucial economic data, leaving the Federal Reserve without October's job and inflation reports, which were canceled due to the Bureau of Labor Statistics' inability to conduct necessary surveys.

Similarly, the Federal Reserve's policymakers will not have access to November's employment or inflation data before their upcoming meeting on December 9-10.

While ADP's report serves as an interim gauge for the job market, it covers only a portion of the private workforce, excluding government positions at all levels. Economists often regard ADP's figures as not entirely in sync with those from the Bureau of Labor Statistics.