The U.S. labor market took an unexpected hit in November 2025, with private payrolls shedding 32,000 jobs—a stark reversal from the previous month’s upwardly revised gain of 47,000. The latest ADP National Employment Report, released on December 3, delivered a jolt to economists and policymakers alike, as the figure fell far short of expectations and triggered a flurry of speculation about the Federal Reserve’s next move on interest rates.
Economists surveyed by FactSet had anticipated a gain of 40,000 jobs, while those polled by Reuters and Bloomberg predicted smaller upticks of 10,000 and 5,000, respectively. Instead, the data revealed not only a miss but the sharpest monthly decline in private payrolls since March 2023, according to Opening Bell Daily. The disappointing numbers were especially notable because they arrived just days ahead of the Federal Reserve’s crucial December 10 policy meeting, and after a government shutdown had delayed other key economic reports.
The immediate market reaction was telling: stocks climbed as investors bet that the weak jobs data would push the Fed toward a long-awaited interest rate cut. CME FedWatch data showed the odds of a quarter-point rate cut at the December meeting jumping to nearly 89%, up from 83% a week earlier and 67% a month ago. As Opening Bell Daily observed, "Markets are back in the familiar territory of bad news in the economy translating to good news for asset prices." It’s a twist in the ongoing story of the so-called K-shaped economy, where negative news on Main Street can translate to rallies on Wall Street.
At the heart of November’s downturn were small businesses, which bore the brunt of the job losses. According to the ADP report, companies with fewer than 50 employees shed more than 120,000 jobs—the most severe losses for this segment since May 2020. "While November’s slowdown was broad-based, it was led by a pullback among small businesses," noted ADP chief economist Nela Richardson in a statement quoted by multiple outlets. Medium and large companies, by contrast, managed to add workers, highlighting a widening divide in the business landscape.
The sector breakdown painted a nuanced picture. Professional and business services lost 26,000 jobs, information-related companies cut 20,000, manufacturing was down 18,000, and both financial activities and construction each dropped 9,000 positions. Yet, not all sectors were in retreat. Education and health services posted a gain of 33,000 jobs, leisure and hospitality added 13,000, trade, transportation, and utilities eked out a 1,000-job increase, and natural resources and mining grew by 8,000. The contrast underscored the uneven impact of current economic headwinds.
Commerce Secretary Howard Lutnick was quick to address the disappointing numbers, pushing back against suggestions that President Trump’s tariffs were to blame. Speaking on CNBC’s "Squawk on the Street," Lutnick argued, "No, no, it’s not tariffs. Remember, you had the Democratic shutdown, right? And then, remember, as you deport people, that’s going to suppress private job numbers of small businesses." He added that the losses were a "near-term event" and predicted, "Next year, the numbers are going to be fantastic." Lutnick’s comments reflect the administration’s stance that the recent government shutdown and policy changes around deportations, rather than trade policy, were responsible for the downturn.
Other experts offered their own interpretations. Chris Zaccarelli, chief investment officer for Northlight Asset Management, noted, "This morning’s ADP data confirm what a lot of the doves are saying – it’s more important to focus on a weakening labor market than to worry about inflation." The data, he suggested, could sway Federal Reserve officials who are currently split between prioritizing inflation and employment. As Opening Bell Daily reported, "In recent months, central bankers have diverged into two camps, split between which side of their dual mandate to prioritize." The latest jobs report appears likely to convince some of the more hawkish members of the Fed to lean into a rate cut.
Wage growth also showed signs of cooling. For employees who stayed in the same job, annual wage growth slowed to 4.4% in November from 4.5% in October, according to the ADP report. Those who switched jobs saw their wages rise 6.3% year-over-year, down from a 6.7% pace the previous month. The slowdown in wage growth, combined with persistent inflation—federal data showed inflation ticking up to 3% in September—adds another layer of complexity to the Fed’s decision-making process.
The broader economic context remains mixed. Major American companies such as McDonald’s and Walmart have reported a growing divide in consumer spending, with households earning more than $100,000 continuing to spend robustly while lower-income consumers cut back on discretionary purchases. This bifurcation is emblematic of the "K-shaped" recovery, where different segments of the economy experience divergent outcomes.
Adding to the uncertainty, the government shutdown not only delayed the release of official labor statistics but also resulted in the permanent loss of October’s unemployment rate data. The Bureau of Labor Statistics is now set to release its combined October and November jobs data on December 16, a week later than planned. Economists expect the official report to reflect further labor market softening, in line with the private payrolls data.
Meanwhile, the market’s response to the jobs report highlights the unusual dynamic at play: bad news for workers is, paradoxically, good news for investors. As Opening Bell Daily put it, Wednesday delivered "the K-shaped economy in a single trading session—negative news on jobs was positive for investors and asset allocators." With stocks hovering just below record highs, the anticipation of a Fed rate cut has become a driving force on Wall Street, even as Main Street grapples with job losses and slowing wage growth.
Federal Reserve Chair Jerome Powell, though the most visible face of U.S. monetary policy, is just one vote among many on the Fed’s board. As Treasury Secretary Scott Bessent reminded attendees at the DealBook Summit, "[There are] several other votes from the regional banks…to move and start the discussion, but at the end of the day...he or she is one vote." The coming days will test the resolve and priorities of the Fed’s policymakers as they weigh the latest signals from a labor market in flux.
With the next official jobs report around the corner and the Fed’s policy meeting looming, all eyes are on how America’s central bankers will respond to the latest evidence of economic strain. As both Main Street and Wall Street brace for what comes next, the November payrolls shock serves as a stark reminder of the fragile balance between growth, inflation, and the health of the nation’s workforce.
