Private employment fell last month, according to the payroll processing company ADP, the latest sign of weakness in the U.S. labor market.
Companies cut 32,000 jobs in November, the third decline in four months, ADP said on Wednesday. Losses were concentrated among small businesses, which cut 120,000 jobs even as larger firms added employees.
“It is those mom-and-pop, main street companies, firms, small businesses and establishments that are really weathering what is an uncertain macro environment and a cautious consumer,” Nela Richardson, the chief economist at ADP, said in a call with reporters. “I see them as a canary in the coal mine.”
Economists have been watching ADP’s data more closely than usual because official figures from the Bureau of Labor Statistics were delayed by the federal government shutdown. The government reopened last month, but disruptions to the statistical system continue. The November jobs report, which was scheduled for this Friday, has been delayed until Dec. 16, and the government is skipping the October report altogether.
Still, ADP’s data doesn’t fully replace the official statistics. It measures only the private sector, meaning it does not reflect federal job cuts. And ADP’s client base, though large, isn’t fully representative of the overall U.S. economy.
Other sources suggest the labor market has cooled significantly in recent months, but hasn’t taken a sharp turn for the worse. Applications for unemployment insurance have drifted up, but haven’t risen sharply. Data from Revelio Labs, LinkedIn and other sources have shown a slowdown in hiring, but not outright job cuts.
“Everything that we’re continuing to see is showing that the labor market seems to be maintaining its slower but steady overall pace,” said Josh Hirt, an economist for Vanguard, which produces its own measure of employment by tracking sign-ups for corporate retirement plans. “We’re not seeing any further deterioration.”
Concerns about the labor market are a big part of the reason that a divided Federal Reserve is expected to cut interest rates at its meeting next week. In the absence of official numbers from the Bureau of Labor Statistics, the weak ADP report could add to those concerns. Still, it is unlikely, on its own, to convince holdouts at the Fed that a cut is warranted.
Ben Casselman is the chief economics correspondent for The Times. He has reported on the economy for nearly 20 years.
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