The ADP National Employment Report, a measure of private employment in the U.S., said on Wednesday that payrolls at private employers declined by 32,000 jobs last month, signaling the labor market continued to face headwinds in September.
More attention may be given to the ADP data this week because the government’s monthly jobs report, scheduled for release on Friday, Oct. 3, could be delayed due to the government shutdown that began today, according to Oxford Economics.
The ADP report, which is based on payroll data from more than 26 million U.S. employees, comes as the U.S. economy expanded at a stronger-than-expected rate in the second quarter. At the same time, the government’s monthly jobs reports this summer have shown disappointing job growth as some businesses are holding off on hiring amid economic challenges such as tariffs and artificial intelligence.
“This is the latest data point signaling a fairly dramatic softening in labor momentum as companies aggressively dial back on hiring,” Adam Crisafulli, head of investment advisory firm Vital Knowledge, said in a report.
September’s ADP decline represents the largest since March 2023, according to Capital Economics.
The government jobs report, issued by the Labor Department’s Bureau of Labor Statistics, is expected to show that employers hired 50,000 people last month, according to economists polled by financial data company FactSet. Given the government shutdown, it’s unclear whether the report will be issued Friday, or, if not, how long it might be delayed.
The ADP report differs from the BLS monthly jobs report in that it only tracks employment at private businesses, while the government data covers both private employers and public sector hiring at local, state and federal levels. As a result, the two reports can differ significantly, and the ADP report doesn’t always foreshadow the BLS’ monthly data.
“Although there is only a passing correlation between monthly changes in the ADP measure of private payrolls and the official non-farm payrolls estimates, the plunge in the former in September is a concern, particularly since the government shutdown could delay the release of the official employment data,” Stephen Brown, deputy chief North America economist with Capital Economics, sad in a report Wednesday.
The Federal Reserve is scheduled to make its next interest-rate decision on Oct. 29, with most economists forecasting a cut of 0.25 percentage points, according to CME FedWatch. The Federal Reserve lowered its benchmark rate by that amount at its meeting last month, with Fed Chair Jerome Powell citing weaker labor market conditions as a reason for the move to ease borrowing costs.
“If the shutdown drags on, the weakness in the ADP will be all the Fed has to go on as it considers another rate cut at the FOMC meeting late this month,” Brown said.
Most of the weakness last month was due to small and midsize businesses shedding jobs, while large employers — those with more than 500 workers — added 33,000 employees in September, ADP said.
ADP also revised its August numbers downward to show that private businesses shed 3,000 jobs, versus its earlier estimate that companies had hired 54,000 employees that month.
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