Job Losses Mount: ADP Reports Sharp Decline in Private Payrolls Amid Government Shutdown
Private Payrolls Fall by 32,000 in September Amid U.S. Government Shutdown and Data Blackout
September data shows labor market signs that point to rising economic risk
In the United States, private payrolls lost 32,000 jobs in September. ADP released this report on October 1, 2025. The drop is the worst since March 2023. Economists had predicted a gain of 45,000 jobs. This result marks a shift in labor market behavior.
Context: Government Shutdown Delays Key Labor Data
A funding standoff in Washington, D.C. caused the first federal shutdown since 2018-2019. This shutdown stops the Bureau of Labor Statistics (BLS) from releasing its data as scheduled. In particular:
- The BLS nonfarm payrolls report for September is delayed.
- The weekly jobless claims figures are on hold.
Policy makers and market watchers now face a gap. They check these figures to assess the economy and set policy.
ADP Report Gains More Weight Ahead of Federal Reserve Meeting
Without the BLS reports, the ADP numbers carry extra weight before the Federal Reserve meeting on October 28–29, 2025. Market experts expect the Fed to cut its main borrowing rate by 0.25 point as signs of a slowing economy appear.
ADP’s chief economist, Nela Richardson, said that a strong second quarter did not stop a slowdown in hiring. US employers now show more caution when making new hires.
Sector and Company Size: A Closer Look at Job Changes
Job changes spread across several industries. Some areas show gains while others lose jobs:
- Job gains: Education and health services added 33,000 jobs amid school reopenings and continuing trends in health care.
- Job losses:
- Leisure and hospitality lost 19,000 jobs as the vacation season wound down.
- Other services dropped by 16,000 jobs.
- Professional and business services shed 13,000 jobs.
- Trade, transportation, and utilities lost 7,000 jobs.
- Construction saw a drop of 5,000 jobs.
Service providers lost 28,000 jobs in total. In contrast, goods-producing sectors lost 3,000 jobs.
Business size also shows different trends:
- Small businesses with fewer than 50 employees cut 40,000 jobs.
- Large companies with 500 or more employees added 33,000 jobs.
Wage Growth Holds Steady
Despite fewer new hires, wage growth did not slow. Average wages increased by 4.5% year-over-year in September, much like in August. For workers who switched jobs, wage gains reached 6.6%, down slightly from the previous month.
Revised August Figures Indicate More Stress
ADP also changed its August data. The gain of 54,000 jobs was adjusted to a loss of 3,000 jobs. This move follows updated BLS figures. It adds to the picture of slowing hiring.
Economic Growth and Future Outlook
The U.S. economy grew 3.8% in the second quarter of 2025. The forecast now predicts a 3.9% gain in the third quarter, according to the Atlanta Fed’s GDPNow tracker. Still, some worry about the labor market. The unemployment rate stays low at 4.3%.
Boston Fed President Susan Collins warned that if job demand falls faster than available workers, unemployment may rise in a short time.
Looking Ahead
With federal data on hold, private reports like ADP’s serve as key indicators of economic health. The slowdown in hiring, occurring with a government shutdown and rising uncertainty, will likely affect the Fed’s next moves.
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