The commencement of a U.S. government shutdown — and the likely delay in government labor figures due for release Friday — made Wednesday’s release of September private payroll figures all the weightier to financial markets on tenterhooks.
The ADP National Employment Report, a measure of private employment in the U.S., showed private payrolls shed 32,000 jobs last month. The numbers suggest that economic uncertainty around tariffs and artificial intelligence continue to undermine job creation.
“Despite the strong economic growth we saw in the second quarter, this month’s release further validates what we’ve been seeing in the labor market, that U.S. employers have been cautious with hiring,” said Nela Richardson, chief economist at ADP, a payroll processing company.
The Census Bureau announced earlier this week that its monthly employment report with figures for September, scheduled for release Friday, would likely be delayed if a government shutdown occurred, clouding markets’ and policymakers’ view of fragile labor markets.
Last week the Commerce Department reported stronger-than-expected economic growth in the second quarter despite weaker-than-reported labor conditions. Weak labor conditions persisted through the summer.
Results from the most recent Job Openings and Labor Turnover Survey (JOLTS), published Tuesday by the U.S. Census Bureau, showed hirings and firings remained essentially flat from July to August as job gains stagnated.
Consecutive months of weak jobs data through the end of the summer prompted the Federal Reserve to cut its benchmark interest rate by 25 basis points at its mid-September policy meeting.
That “risk management” cut signaled a shift to bolster labor markets despite the pace of inflation remaining well above the Fed’s stated 2% target. The pace of future easing depends on month-to-month changes in labor markets and consumer prices.
In recent weeks, a slew of Federal Reserve governors have expressed widely contrasting views on the direction of U.S. monetary policy and the pace of additional cuts in 2025.
Stephen Miran, a White House economic adviser who was President Donald Trump’s pick to fill a temporary seat on the Fed’s board, has called for lowering the federal funds rate to the mid-2% range, nearly 200 basis points lower than current levels. Atlanta Fed President Raphael Bostic has advocated for pumping the brakes on rate cuts, voicing concern that policymakers’ fight against inflation is not won.
ADP’s employment report showed job creation in September lost momentum across most sectors. The 33,000 jobs added in the education and health services sector could not offset a rout across the services sector.
By sector, leisure and hospitality lost 19,000 jobs, professional and business services lost 13,000 jobs, financial services lost 9,000 jobs and trade, transportation and utilities lost 7,000 jobs, amid other losses. On the goods side, the construction sector lost 5,000 jobs and the manufacturing sector shed 2,000 jobs.
The deteriorating labor market has eroded consumer confidence in recent weeks amid rising consumer prices. The Conference Board reported on Tuesday that consumers’ assessments of current job availability has fallen for nine consecutive months.
“Almost all types of services registered a decline in buying intentions, especially travel-related services,” the Conference Board report noted. A decline in consumer spending on services would not bolster hopes that private payrolls can add back service jobs shed last month.
