The US job market is undergoing significant stress in 2025, marked by slowing job growth, rising unemployment, and a growing mismatch between available jobs and workers.
In a new upset, American private-sector payrolls have dropped by 32,000 in November, marking the largest decline since early 2023 and signalling deepening labour market weakness, according to an ADP report.
The report surprised economists, who expected a gain of 40,000 jobs. It marks a sharp fall from October’s revised gain of 47,000 jobs, showing a clear slowdown in hiring.
What’s behind the decline?
The decline, driven mainly by small businesses shedding 120,000 positions, signals a weakening economy challenged by rising costs, cautious consumer behaviour, and economic uncertainty.
While larger firms added jobs, the widespread job cuts across sectors like professional services, manufacturing, and information highlight imbalances in the market.
Wage growth has also slowed, reflecting the cautious stance of employers amid an unpredictable macro-economic environment.
This downturn worsens concerns over labour market stability just ahead of the Federal Reserve’s scheduled rate decision, raising fears of a potentially deeper economic slowdown or recession.
Small businesses suffer most
Small businesses with fewer than 50 workers lost 120,000 jobs, including 74,000 from firms with 20-49 employees. Bigger companies with 50 or more workers added 90,000 jobs, but it was not enough to offset the losses.
ADP chief economist Nela Richardson said hiring has been uneven due to cautious consumers and economic uncertainty.
Sector-wise breakdown
Job gains came from education and health services (33,000 added) and leisure and hospitality (13,000), according to the report. Losses on the other hand, hit professional and business services hardest (down by 26,000), and financial activities and construction (9,000 each). The Northeast region saw the biggest drop at 100,000 jobs lost.
Fed impact?
Pay for workers staying in jobs rose 4.4% year-over-year, down slightly from October. This is the last jobs data before the Federal Reserve’s December 9-10 meeting, where markets foresee a 90% chance of a quarter-point rate cut, according to the report.