Private employers in October reversed September’s job losses — notching the largest gains since July — according to Wednesday’s release of private payroll figures.

The ADP National Employment Report, a measure of private sector employment in the U.S., showed private payrolls added 42,000 jobs last month after shedding 32,000 the month prior.

“Private employers added jobs in October for the first time since July, but hiring was modest relative to what we reported earlier this year,” said Nela Richardson, chief economist at ADP, a payroll processing firm.

An ongoing government shutdown that commenced Oct. 1 — and is now the longest in U.S. history — has created a government data blackout, obscuring the health of U.S. labor markets that have weakened over the course of 2025.

The delay of the National Employment Report for September and October, published monthly by the U.S. Bureau of Labor Statistics, did not deter Federal Reserve policymakers from voting to lower its benchmark borrowing rate by 0.25% for the second consecutive month at its policy meeting last week, a move made to stimulate employers’ labor demand.

The last government jobs report, released in early September, showed employers added just 22,000 jobs in August.

Fed Chair Jerome Powell underscored in a press conference following the decision that the central bank sees stagnant job creation resulting from a dramatic reduction in the supply of new workers due to immigration policy, declining labor force participation and shrinking demand for workers.

“We do not see the weakness in the job market accelerating,” he said, noting that initial jobless claims have not spiked, the job creation rate and job finding rate are both low, and the unemployment rate has remained stable around 4.3%.

Meanwhile, inflation remains firmly above the Fed’s stated target of 2% annualized growth, rising 3% in September according to the consumer price index. The Fed has a dual mandate to maximize employment and maintain stable prices.

The largest job gains in October, per the ADP report, were in the services sector, which added 33,000 jobs. Gains in trade, transportation and utilities, education and health care, and financial services were offset by losses in leisure and hospitality, information, and professional and business services.

Across the goods sector, manufacturers shed 3,000 jobs compared to a loss of just 2,000 jobs in September, while the construction industry added 5,000 jobs after losing 5,000 jobs the previous month.

Large firms with more than 500 employees drove the hiring gains, adding 73,000 positions compared to respective losses of 21,000 and 10,000 for midsize and small companies.

Gains were distributed across the country, with private payrolls shrinking in only two of the nine census divisions. The Mid-Atlantic division shed 20,000 jobs while the South Atlantic division lost 8,000.

Potential rate cut implications

In the temporary absence of federal statistics, the Fed relies on private data sources such as ADP, industry outreach and data collected at the state level.

Speaking on Monday with the Brookings Institution’s David Wessel in her first public appearance since President Donald Trump moved to fire her in August, Fed Governor Lisa Cook provided insight on how policymakers navigate increasingly opaque markets.

Cook mentioned her longstanding practice of finding “the mortar between the bricks” of aggregate numbers. She said she seeks anecdotal evidence about the economy that represents current conditions, not data reported with a monthly, or even longer lag.

Wessel asked how she pursues these interactions with ordinary businesses and people.

“I used to just get lost in Virginia and walk into a diner and listen to people talk about how they experience inflation,” Cook said. “I can’t do that anymore, but I interact with everyday people and we have a lot of engagement that goes on at the Reserve Banks.”

Last week’s decision to lower rates by 25 basis points produced two formal dissents. Powell mentioned “different risk appetites” multiple times during the press conference as a driving force behind the “strongly differing views” of Fed members on future policy.

Stephen Miran, the newest member of the Federal Open Market Committee, was in favor of a jumbo cut of 50 basis points. Jeffrey Schmid, president of the Federal Reserve Bank of Kansas City, voted to leave rates unchanged.

Cook defended the October rate cut, hedged on December’s outlook, and warned that she is “prepared to act forcefully” if higher levels of inflation become entrenched in expectations.

The October job gains reported by ADP appear to reinforce Powell’s message that weakening job creation has not worsened into rising job losses. Stabilization in the current “low hire, low fire” labor market led Powell to cast doubt on a rate cut in December.

Market-implied odds of an additional 0.25% rate reduction next month declined slightly on the news of the modest jobs rebound, from 69% on Tuesday to about 63% as of midday Wednesday, according to CME FedWatch, which tracks fed funds futures prices.