Small businesses cut 120,000 jobs in November, ADP says

Private employers in the U.S. shed 32,000 jobs in November, payroll processor ADP said Wednesday. Economists surveyed by Dow Jones had been expecting to see an increase of 40,000.

ADP chief economist Nela Richardson described November’s jobs data as a “slowdown” that was “broad-based.”

The drop was “led by a pullback among small businesses,” said Richardson.

Small firms with fewer than 50 employees led the contraction by far, shedding 120,000 jobs.

The pace of hiring also slowed at medium and large-sized businesses, although these firms still added a net number of positions.

“There would have been a net increase in hiring, but it is those mom and pop, main street companies, firms, small businesses and establishments that are really weathering what is a uncertain macro environment and a cautious consumer,” Richardson told reporters on a conference call.

Among the industries that fared the worst in November were professional/business services, manufacturing, and firms that provide information services.

One bright spot Richardson highlighted is the natural resources and mining industry, which added 8,000 roles.

“I think it is tied to the enormous amount of infrastructure investment that we’ve seen with data centers, which are resource intensive,” she said, referring to dozens of investments that tech and AI firms are making in cloud-computing centers that require huge amounts of power.

The report comes as the data blackout caused by the government shutdown nears its end. But still, the next government jobs report still will not be released until Dec. 18.

ADP’s Wednesday report will likely fuel further concerns about a deteriorating employment picture, after the most recent federal jobs reports showed a labor market on unsteady ground.

In June, the economy shed 13,000 jobs, in July it added 72,000, but then in August it again lost jobs with 4,000 roles being eliminated. The latest report in September showed 119,000 jobs being added across the country.

The recent private jobs reports released from ADP also showed unsteadiness. Payrolls at private companies have contracted in four of the last six ADP reports, which are released monthly.

“The slowdown in hiring is matched by a slowing in pay growth year over year. Pay for jobs stayers rose 4.4% and that’s down from 4.5% in October,” Richardson said.

The delay in official government data due to the shutdown also means that the Federal Reserve will not receive the all-important jobs report or inflation reports for the month of October. Those were canceled because the Bureau of Labor Statistics did not have staff in place to conduct surveys that inform the report.

Likewise, the central bank’s policymakers will not receive November’s employment report or inflation until after their next interest rate-setting meeting on Dec. 9-10.

While ADP’s report has been used as a substitute for the official jobs report, it only covers some of the private workforce in the U.S. and does not include the local, state or federal government workforce. Economists also typically view ADP’s report as being slightly out of sync with the Bureau of Labor Statistics’ report.