Every now and then a single economic number lands like a punch you didn’t see coming.
This morning it was the ADP private payroll report for November 2025. Instead of the modest gain most economists expected, the headline flashed a net loss of 32,000 jobs—the first outright decline since the pandemic recovery days. For anyone who’s been watching the labor market like a hawk, that’s the kind of moment that makes you sit up straight and reach for another coffee.
But the real story isn’t just the topline number. It’s where the pain is concentrated.
Small Businesses Are Taking the Brunt
Here’s the part that genuinely surprised me: companies with fewer than 50 employees slashed a combined 120,000 positions. Think about that for a second. That’s not a rounding error. That’s entire payrolls disappearing from Main Street.
Larger firms—those with 50 or more workers—actually added 90,000 jobs. So the overall private sector loss would have been a decent gain if small establishments weren’t hemorrhaging workers at a pace we haven’t seen since spring 2023.
I’ve spoken with enough small-business owners over the years to know how quickly sentiment can shift. One month you’re cautiously optimistic and thinking about adding a part-time hire. The next month sales soften, credit lines tighten, and suddenly you’re looking at the schedule trying to figure out whose hours you can cut without losing the people you can’t afford to lose. That’s exactly what this report feels like on the ground.
Breaking Down the Damage by Company Size
- Firms with 1–19 employees: –46,000 jobs
- Firms with 20–49 employees: –74,000 jobs
- Firms with 50–499 employees: +37,000 jobs
- Firms with 500+ employees: +53,000 jobs
When you see it laid out like that, the picture becomes painfully clear. The very smallest companies—those mom-and-pop operations that employ the bulk of American workers—are the ones pulling back hardest.
Which Industries Got Hit Hardest?
It wasn’t just one or two sectors dragging the numbers down. The slowdown was surprisingly broad.
Professional and business services—think consultants, temp agencies, law firms—shed 26,000 jobs. Information services (media, telecom, data processing) dropped 20,000. Manufacturing gave back 18,000. Even construction and financial activities saw meaningful cuts.
On the brighter side, education and health services continued to hire (up 33,000) and leisure/hospitality managed a modest 13,000 gain. But those pockets of strength weren’t nearly enough to offset the widespread pullback elsewhere.
“Hiring has been choppy of late as employers weather cautious consumers and an uncertain macroeconomic environment. And while November’s slowdown was broad-based, it was led by a pullback among small businesses.”
– Nela Richardson, Chief Economist at ADP
She’s not wrong. “Choppy” feels like the polite way to put it. To a lot of owners, it probably feels more like whiplash.
Wage Growth Is Cooling—Slowly
Another noteworthy detail buried in the report: annual pay growth for job-stayers slipped to 4.4%, down a tick from October. That’s still well above inflation, but the trend is clearly decelerating.
For the Federal Reserve, that’s the silver lining they’ve been waiting to see. Wage pressures easing give policymakers more room to cut rates without worrying (as much) about re-igniting inflation.
What Happens Next Week at the Fed?
Timing couldn’t be more dramatic. This ADP report is literally the last major employment print the Fed will see before their December 9-10 meeting.
Markets are currently pricing in roughly an 85–90% chance of a 25 basis point cut. A month ago that probability was closer to 70%. Today’s numbers will almost certainly push it higher.
But here’s the thing: not everyone inside the Fed is convinced another cut is wise. Some officials have been pushing back publicly, arguing that inflation is still sticky and the labor market—until today—looked remarkably resilient.
Well, resilience just took a noticeable step back.
Is This the Start of Something Bigger?
One month does not make a trend, especially with ADP data, which can be volatile and sometimes revises sharply. October’s originally reported +28,000 was revised up to +47,000 this morning, for example.
Still, when you combine today’s report with other recent signals—rising continuing jobless claims, softening job openings, a tick higher in the unemployment rate to 4.2%—it’s getting harder to argue the labor market is “solid.” It’s cooling, and perhaps cooling faster than many expected.
In my view, the most interesting question isn’t whether the Fed cuts next week (they almost certainly will). It’s whether this small-business pullback marks the beginning of a more meaningful slowdown that forces the Fed to accelerate the pace of cuts in 2026.
The Bottom Line for Investors and Workers
If you’re an investor, today’s report is a reminder that the “soft landing” narrative still has risks. Small businesses employ roughly half of all private-sector workers in the U.S. When they stop hiring—or worse, start cutting—it’s a leading indicator worth watching closely.
If you’re a worker, particularly at a smaller company, it might be a good moment to update the résumé and tighten the budget, just in case.
And if you’re the Federal Reserve? You’re probably looking at these numbers and feeling a little more urgency to get ahead of any further deterioration.
We’ll get the official BLS nonfarm payrolls report on December 16—delayed this month because of the government shutdown. Until then, this ADP print is the clearest signal we have that the labor market may finally be rolling over.
Sometimes one unexpected number really does change the conversation. Today feels like one of those days.
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