Private sector employment in the United States took a sharp and unexpected downturn in September 2025, with payrolls shrinking by 32,000 jobs according to the latest ADP National Employment Report. The news, released Wednesday, sent ripples through Wall Street and Washington alike, as it marked the largest decline in private payrolls since March 2023 and compounded worries about the resilience of the U.S. labor market. The timing couldn’t be worse: a federal government shutdown has triggered a blackout of official economic data, leaving policymakers, investors, and the public to rely on private estimates like ADP’s to gauge the health of the economy.
For the first time since the government shutdown of 2018-2019, the Bureau of Labor Statistics (BLS) was unable to publish its monthly jobs report—scheduled for October 3—nor release weekly jobless claims data. As a result, the ADP report, which typically plays second fiddle to the official numbers, became the main barometer for labor market watchers this month. According to CNBC, the ADP’s findings were particularly grim when stacked against economists’ expectations, who had forecasted a gain of 45,000 to 50,000 jobs for September. Instead, the labor market lost ground, continuing a trend that has seen average monthly job gains dwindle to just 29,000 throughout 2025.
Small businesses bore the brunt of September’s job losses. Companies with fewer than 50 employees slashed 40,000 positions, while midsized firms (50 to 499 employees) shed 20,000 jobs. Large companies, defined as those with 500 or more workers, managed to add 33,000 jobs, offering only a modest counterbalance to the widespread cuts elsewhere. "Small private-sector businesses drove last month’s decline, and losses were widespread across industries," ADP chief economist Nela Richardson told reporters, as cited by CNN.
The damage was not limited to the size of the business. Across sectors, the losses were broad and deep: leisure and hospitality—a key sector for consumer demand—lost 19,000 jobs, professional and business services dropped 13,000, other services fell by 16,000, trade, transportation, and utilities saw a reduction of 7,000, and construction was down by 5,000. Manufacturing also took a hit, losing 2,000 positions. The only bright spots came from education and health services, which added a robust 33,000 jobs, as well as smaller gains in natural resources and mining (4,000 jobs) and information (3,000 jobs), according to Fox Business.
These figures were further complicated by ADP’s annual benchmarking process, which recalibrated past counts using the BLS’s own Quarterly Census of Employment and Wages. This adjustment resulted in a sharp downward revision of August’s payrolls—from a previously reported gain of 54,000 to a loss of 3,000 jobs. "We found that once we benchmarked that data, it actually shows a September slowdown that has been consistent with what we’ve been reporting all year," Richardson explained to CNN. In total, ADP’s rebenchmarking led to a downward adjustment of 43,000 jobs for September.
Despite the bleak numbers, the U.S. economy has shown resilience in certain areas. The Atlanta Federal Reserve’s GDPNow tracker estimates economic growth at 3.8% for the second quarter and projects a 3.9% gain for the third quarter. Yet, as Richardson noted, "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." This caution is echoed in the unemployment rate, which has crept up from 4.0% earlier in the year to 4.3%—the highest level in nearly four years, as reported by Nexstar Media.
Economists and analysts have pointed fingers at several culprits for the labor market’s sluggishness. Trade tariffs and the uncertainty surrounding them have pressured businesses, especially those reliant on global supply chains. Immigration policies, particularly the Trump administration’s deportation agenda, have removed thousands of workers from the labor pool, sapping both productivity and consumer spending. On top of that, rapid advances in artificial intelligence have begun to reshape the job market for computer programmers and engineers, with tech companies increasingly automating coding work—leaving recent college graduates in the lurch.
Wage data offered little comfort. According to ADP, annual wage growth for those staying in their jobs held steady at 4.5% in September, with job changers seeing their pay increase by 6.6%—down from 7.1% in August. The overall hiring rate, which measures hires as a percentage of total employment, fell to 3.2% in August, matching its lowest level since 2013 outside the pandemic period, based on the BLS’s Job Openings and Labor Turnover Survey.
The government shutdown’s impact on economic data has left policymakers at the Federal Reserve in a bind. The central bank relies on official payrolls data to guide its decisions on interest rates. With the next policy meeting scheduled for October 28-29, Fed officials are turning to alternative data sources like ADP’s report to fill the gap. Chicago Federal Reserve President Austan Goolsbee told Fox Business, "The Bureau of Labor Statistics is the best source of data that we have. It pains me that we wouldn’t be getting official statistics at exactly a moment when we’re trying to figure out is the economy in transition."
Despite the lack of official data, the consensus among economists is that the Federal Reserve will move forward with a 25 basis-point interest rate cut at its upcoming meeting. Joe Brusuelas, chief economist at RSM US, summed up the mood in a note to investors: "Hiring is at risk as policy uncertainty driven by trade and immigration policy as well as long term demographic challenges that are adversely impacting the availability of labor supply. Given that the government shutdown and threats of mass firings permeate the latest edition of the fiscal follies, this is all not conducive to the October payroll outlook."
Looking ahead, the labor market faces a tricky road. While education and health care continue to provide some stability, the widespread losses across other sectors and the persistent uncertainty in Washington are making it harder for businesses to plan and hire. As policymakers, investors, and workers wait for the return of official data, the ADP report serves as a sobering snapshot of an economy at a crossroads—caught between strong headline growth and an increasingly fragile job market.
