U.S. Job Market Stumbles as Small Businesses Slash 120,000 Workers in Worst Drop Since 2023

The U.S. labor market slowdown deepened in November as private employers cut 32,000 jobs, with small businesses taking the biggest hit, according to payroll processor ADP on Wednesday.

With concerns growing about the strength of the job market, ADP reported that the decline was far worse than expected. The drop marked a sharp reversal from October, when payrolls rose by a revised 47,000 jobs, and fell well short of economists’ Dow Jones forecast for a gain of 40,000.

Larger companies with 50 or more employees actually added 90,000 jobs.

But businesses with fewer than 50 workers shed 120,000 positions, including a loss of 74,000 among firms with 20 to 49 employees. It was the steepest decline for small businesses since March 2023.

Job gains were led by education and health services, which added 33,000 positions, followed by leisure and hospitality with 13,000. Overall, however, broad declines across multiple industries dragged total payrolls lower.

Professional and business services recorded the largest losses at 26,000 jobs. Other sectors seeing cuts included information services (-20,000), manufacturing (-18,000), and both financial activities and construction, each down 9,000.

Wage growth also slowed. Workers who stayed in their jobs saw a 4.4% year-over-year pay increase, a slight dip from October’s 4.5%.

“Hiring has been choppy lately as employers navigate cautious consumers and an uncertain economic environment,” said ADP chief economist Nela Richardson. “While November’s slowdown was broad-based, it was driven primarily by small businesses pulling back.”

The ADP numbers provide the last snapshot of the labor market before the Federal Reserve meets on Dec. 9–10. Futures markets show nearly a 90% chance the Fed will approve another quarter-point rate cut, despite some officials questioning whether additional easing is necessary. That probability remained largely unchanged after the report.

Fed policymakers have recently split into two camps: those who see rate cuts as needed to prevent further weakening in the labor market, and those who fear additional cuts could worsen inflation, which remains well above the central bank’s 2% target.

The Bureau of Labor Statistics is scheduled to release its official nonfarm payrolls report on Dec. 16, a date pushed back due to the federal government shutdown.

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