The Job Market Is In Its Worst Stretch Since The Pandemic

Yet another red flag is waving about the health of the labor market.

Private employers shed 32,000 jobs in November, payroll provider ADP said Wednesday. The job losses came as a surprise to forecasters, who had expected a gain of 40,000 jobs according to a survey of economists by Dow Jones Newswires and The Wall Street Journal. Private employers have lost jobs in three out of the last four months for a total loss of 16,000 jobs, the worst four-month stretch since the pandemic.

The data from ADP was the latest in a series of reports showing the job market is slowing down. Economists generally consider ADP data to be less comprehensive and less reliable than official government reports. However, data from statistical government agencies has been hard to come by because of the recent shutdown, and the Bureau of Labor Statistics is still playing catch-up. The ADP data suggested the job market, which has been in a low-hiring, low-firing limbo, could be taking a turn for the worse.

“This is no longer a low-hiring job market; it’s a start-to-fire job market,” Heather Long, chief economist at Navy Federal Credit Union, wrote in a commentary.

Not only did the private sector lose jobs overall, but the losses were widespread across industries, with education, health services, and leisure and hospitality providing the only bright spots, adding a combined 46,000 jobs.

“The only industries still hiring are hospitality and health care,” Long wrote. “If you don’t want to work at a bar or in health care, you’re out of luck.”

The job losses could pressure officials at the Federal Reserve to cut interest rates at the Fed’s next policy meeting next week in an effort to encourage spending and prevent unemployment from rising severely.

Fed officials have been divided about whether to cut rates to rescue the job market or keep them higher for longer to fight inflation. The recent job market data gives ammunition to the “cut” side of the debate, and financial markets were pricing in an 88% chance of a rate cut as of Wednesday, according to the CME Group’s FedWatch tool, which forecasts rate movements based on fed funds futures trading data.

Tariffs, and especially the uncertainty about them, are a leading cause of the job market slowdown, according to many economists, and the tariff impact was evident in the ADP report. Businesses with fewer than 50 employees have been the most vulnerable to tariff impacts, resulting in job losses for the fourth consecutive month.

“This might reflect smaller firms struggling more to adapt to tariff-related supply disruptions,” Sal Guatieri, senior economist at BMO Capital Markets, wrote in a commentary.