ADP estimated in the November edition of its National Employment Report that private payrolls declined by -32,000, the largest monthly decline that ADP has reported since March 2023. The fourth monthly decline in six months was well below the modestly optimistic forecast of an increase of 10,000. The weak reading was further confirmation of a trend of deterioration in hiring demand that has been developing since Q2 2025. The three-month average dropped to below zero for the first time since the pandemic, falling from around 37,000 in July to 5,000 in October and now around -4,300 in November.

The details point to a broad-based decline across industries, with education & health services continuing to be an outlier:

• The private goods sector saw employment down -19,000 in November, led by declines in construction (-9,000) and manufacturing (-18,000). The manufacturing industry specifically has seen four straight months of declines, with the November drop being the largest in that sequence, for a total decline in private manufacturing employment of -30,000 in that period.

• The private services sector saw employment decline -13,000 in November. Within the services industries, the changes were more mixed, but the biggest declines were seen in information (-20,000) and professional & business services (-26,000). Offsetting the job losses in the rest of the sector were gains in education & health services (+33,000) and leisure & hospitality (+13,000). Excluding education & health services, the headline employment change would have been the worst since the pandemic at -65,000.

The segmentation by firm size shows that the decline in employment continues to be concentrated in small businesses. ADP reports that smaller firms lost a total of -120,000 jobs in November, while mid-sized and large firms both saw job gains of 51,000 and 39,000, respectively. This is a continuation of the trend we have seen over the last few months and confirms that the labor market is experiencing a cyclical downtrend where the economically sensitive parts of the economy are hurting the most.

ADP’s wage data also signaled weakness in the labor market. The annual pay growth of job changers has been tracked as an indicator of tightness in employment data, and it just saw its largest deceleration since September 2024, which, coincidentally, was when the Fed decided to cut rates by 50 bps. Job changers’ pay growth now sits at 6.3% YoY in November, falling from 6.7% YoY in October, the lowest reading since February 2021. The wage data also supports to narrative that small businesses are leading the labor market deterioration. While large and mid-sized firms’ wage growth (for job stayers) was between 4.7% and 4.9% YoY, wage growth in the smallest segment of firm size (1-19 employees) was just 2.5% YoY.