The U.S. labor market seems to be in a lot of trouble. Payrolls processing firm ADP reported Wednesday that the U.S. labor market slowdown intensified in November as private companies cut 32,000 workers, with small businesses hit the hardest.
The payrolls decline marked a sharp step down from October, which saw an upwardly revised gain of 47,000 positions, and was well below the Dow Jones consensus estimate from economists for an increase of 40,000.
“Hiring has been choppy of late as employers weather cautious consumers and an uncertain macroeconomic environment,” said ADP’s Chief Economist Nela Richardson. “And while November’s slowdown was broad-based, it was led by a pullback among small businesses.”
READ: Private payroll losses accelerated in past four weeks, according to ADP (November 25, 2025)
The biggest loss came in professional and business services, which saw a decline of 26,000, others shedding jobs included information services (~20,000), manufacturing (~18,000), and financial activities and construction, both of which saw losses of 9,000.
In 2025, the U.S. labor market shows clear signs of a slowdown after several years of strong post-pandemic growth. While unemployment remains relatively low, around 4.1% in mid-2025, other indicators point to cooling dynamics. Job creation has weakened: for instance, January saw employers add only 143,000 positions, below economists’ expectations of roughly 170,000, and private-sector payrolls reportedly decreased by 32,000 in November, suggesting a potential contraction in some industries.
The employment-to-population ratio has fallen to about 59.7%, its lowest since early 2022, and the number of job vacancies per unemployed person has declined toward pre-pandemic levels.
Several factors contribute to this slowdown. Economic growth has moderated compared with 2024, influenced by trade tensions, tariffs, and broader policy uncertainty, which seem to have dampened business investment and hiring.
The ADP report is the last jobs picture the Federal Reserve gets before it meets Dec. 9-10, futures traders are assigning a nearly 90% probability that the central bank will approve another quarter percentage point cut in its key interest rate, despite misgivings from some officials over whether further easing is needed. The probability was about the same following the ADP release.
Several factors contribute to this cooling, including slower economic growth, ongoing trade and policy uncertainties, and changing labor-supply conditions. These conditions have prompted more cautious hiring practices, selective layoffs, and in some cases, temporary freezes on workforce expansion. The slowdown also carries implications for monetary policy: the Federal Reserve’s upcoming decisions on interest rates will be informed by the latest employment data, as policymakers weigh the need to balance inflation control with sustaining labor-market momentum.
Overall, the U.S. labor market is entering a period of heightened caution and adjustment. Employers, workers, and policymakers must navigate uncertainty about the persistence of these trends, sectoral disparities, and potential impacts on wages and long-term economic growth, while remaining responsive to evolving economic signals.
Worker confidence and spending may be affected by perceived job insecurity and wage growth uncertainty, which in turn could influence broader economic activity. Policy responses, including potential interest-rate adjustments, fiscal measures, or state-level interventions, may also shape how quickly the labor market recovers or adjusts.