Private sector employment in the United States unexpectedly contracted last month, posting its most significant decline in over two and a half years. The latest ADP National Employment Report, released on Wednesday, 3 December 2025, showed the economy lost 32,000 private jobs in November.
Digging into the Data: Small Businesses Bear the Brunt
The headline figure, which was the largest drop since March 2023, contrasted sharply with economists' forecasts. Analysts polled by Reuters had anticipated a gain of 10,000 jobs, following an upwardly revised increase of 47,000 in October.
The pain was concentrated among small businesses. Establishments classified as small shed a substantial 120,000 positions in November. Many economists directly linked this weakness to the impact of import tariffs, which have raised operational costs for smaller firms. In contrast, medium-sized enterprises added 51,000 jobs, and large businesses increased payrolls by 39,000.
Economists Urge Caution Amid Data Divergence
Several financial experts immediately cautioned against viewing the ADP report as a definitive signal of labour market deterioration. They highlighted the report's frequent divergence from the official government figures compiled by the Bureau of Labor Statistics (BLS).
Samuel Tombs, chief US economist at Pantheon Macroeconomics, noted, "It is too loosely correlated with the official data to be troubling." His firm's model suggested the official BLS report, when eventually released, would show private payroll growth between 75,000 and 100,000 for November.
Other indicators present a mixed picture. First-time claims for unemployment benefits have remained low, supporting a "no-hire, no-fire" narrative in the labour market. Furthermore, the Institute for Supply Management's services sector index held steady at 52.6 in November, indicating continued expansion, though businesses cited tariffs and customs paperwork as persistent constraints.
Implications for the Federal Reserve and Broader Economy
The unexpected data arrives at a critical juncture for monetary policy. US central bank officials are scheduled to meet next week to decide on interest rates but will not have the official November employment report from the BLS available.
This could elevate the importance of the ADP survey in their deliberations, despite its recognised flaws. Sal Guatieri, a senior economist at BMO Capital Markets, suggested the report might provide dovish-leaning Federal Reserve governors with ammunition to advocate for another rate cut, countering more hawkish regional bank presidents.
The backdrop remains one of economic uncertainty fueled by trade policy. A separate report on import prices showed the cost of goods from China jumped 0.8% in September, the largest monthly gain since July 2008. Christopher Rupkey, chief economist at FWDBONDS, stated, "Tariffs will be added to the costs that Americans pay for the incoming goods once the ships dock at U.S. ports."
Investors reacted to the jobs data with a shift towards safer assets. US Treasury yields fell and the dollar weakened, while Wall Street stocks traded higher.
The delayed official BLS employment report for November is now due for release on 16 December. It was postponed due to the recent US government shutdown, which also means the unemployment rate for October will never be officially calculated.
