In a striking sign of growing strain in the U.S. labour market, payroll processor ADP revealed that private sector employers cut 32,000 jobs in September. This sharp drop defied market expectations of a modest increase and displayed a rapid loss of hiring momentum amid mounting economic pressures.
ADP’s monthly employment report, issued on Wednesday, was anticipated by analysts to show growth of around 45,000 jobs. Instead, the data showed a contraction, intensifying concerns over the labour market’s health following earlier positive indicators like steady GDP expansion and stable unemployment claims.
“Despite the robust economic growth seen in the second quarter, this month’s figures further confirm that U.S. employers remain cautious about hiring,” said ADP’s chief economist, Nela Richardson.
The government shutdown that started Wednesday has closed the Bureau of Labour Statistics, delaying the official government jobs report due on Friday. This makes ADP’s figures the latest snapshot of employment trends.
Smaller firms suffered the heaviest losses. Businesses with 20 to 49 employees shed 21,000 jobs, while companies with fewer than 19 workers cut 19,000 roles. By contrast, larger companies with more than 500 employees were the only group to experience job growth in September, revealing a growing divide in labour demand depending on company size.
Sectors most impacted include leisure and hospitality, professional and business services, and financial activities. Additionally, trade, transportation, and utilities saw significant job reductions.
ADP’s report also showed that wage growth for employees changing jobs slowed from 7.1% in August to 6.6% in September.
However, pay increases for “job stayers”—workers in the same role for an extended period—continued to outpace inflation, rising 4.5% year on year. This may help maintain consumer spending despite the softer job market.
Earlier figures for August were also revised sharply downward, shifting from an initial estimate of 54,000 new jobs to a net decline of 3,000, suggesting the slowdown has been in progress for some time.
These developments come amid ongoing concerns around inflation, rising interest rates, and global geopolitical uncertainty, all of which may be prompting businesses to hold back on hiring. Some economists view the cooling labour market as an adjustment to these headwinds, potentially indicating slower economic growth ahead.
With the government shutdown delaying official employment data, analysts will be watching upcoming reports closely to see whether this recent weakening in jobs continues or stabilises. For now, ADP’s latest numbers offer an early indication that the U.S. job market is losing steam.