Shock Decline: Private Payrolls Plummet by 32,000 in September Amid Critical ADP Report and Data Blackout
Private payrolls in the U.S. experienced their sharpest decline in two-and-a-half years in September, signaling further weakening in the labor market amid a data blackout due to the ongoing government shutdown. According to payroll processing firm ADP, companies shed a seasonally adjusted 32,000 jobs last month-the largest drop since March 2023. This stark figure contrasts sharply with economists’ forecasts by Dow Jones, which anticipated a gain of 45,000 jobs.
The labor situation is further complicated by revisions to August’s payrolls, now indicating a loss of 3,000 jobs instead of the previously reported increase of 54,000. This report coincides with the government shutdown, the first since late 2018, with potential repercussions for critical labor statistics. If Congress fails to reach an agreement within the next two days, the Bureau of Labor Statistics (BLS) will not release its nonfarm payrolls report for September, nor will it publish the weekly jobless claims figure on Thursday. The last delay of the BLS payrolls report dates back to 2013. Federal Reserve officials closely monitor these payroll figures when making interest rate decisions, with their next meeting scheduled for October 28-29.
In September, job losses were felt across multiple sectors. Despite a 33,000 increase in education and health services due to school reopenings and ongoing hiring in healthcare, leisure and hospitality saw a decline of 19,000 as the vacation season ended. The “other services” category dropped by 16,000, while professional and business services lost 13,000 jobs. Additionally, trade, transportation, and utilities decreased by 7,000, and construction saw a reduction of 5,000. Overall, service providers lost 28,000 jobs, while goods-producing sectors shed 3,000. Notably, businesses with fewer than 50 employees recorded a loss of 40,000 jobs, while larger firms with 500 or more employees added 33,000.
ADP Chief Economist Nela Richardson commented on the findings, stating, “Despite the strong economic growth we saw in the second quarter, this month’s report further validates what we’ve been seeing in the labor market: U.S. employers have been cautious with hiring.” The U.S. economy expanded by 3.8% in the second quarter, and the Atlanta Fed’s GDPNow data tracker indicates a projected 3.9% increase for the third quarter. However, uncertainty looms over the labor market, even with the unemployment rate standing at a relatively low 4.3%.
Boston Fed President Susan Collins expressed caution, stating, “My baseline outlook doesn’t see the labor market softening much further-but there are risks. In particular, I see some increased risk that labor demand may fall significantly short of supply, leading to a more meaningful and unwelcome increase in the unemployment rate.”
Looking ahead, analysts anticipate a nonfarm payroll gain of 51,000 in the BLS report, which encompasses government jobs. Despite the slowdown in hiring, ADP reported that wages increased by 4.5% year-over-year in September, remaining stable compared to August. However, wage growth for job switchers slowed to 6.6%, representing a half-percentage point decrease from the previous month.
This confluence of factors paints a complex picture for the U.S. labor market as it navigates economic uncertainties amidst a government shutdown, highlighting the need for keen monitoring in the months to come.
Original Source: https://www.cnbc.com/2025/10/01/private-payrolls-declined-in-september-by-32000-in-key-adp-report-coming-amid-shutdown-data-blackout.html
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Publish Date: 2025-10-01 17:45:00
