US private sector sheds jobs as small businesses face mounting pressure

According to a recently published report, the US private sector lost 32,000 jobs in November after adding an upwardly revised 47,000 jobs the previous month.

These losses, led by small businesses, were America’s largest private sector employment decline since the beginning of 2023, according to ADP, which publishes data on wages, human resources, and taxes.

Recently, ADP’s employment figures, which have been substituting for missing government data due to the recent government shutdown, surprised analysts who had predicted America would gain several thousand jobs.

The government’s November employment report, scheduled for release on December 16 after a delay, will provide a more complete picture of what is happening in the US business world, but for now, it is clear that small businesses are dragging down the latest employment statistics.

According to ADP, companies with fewer than 50 employees laid off 120,000 workers. Larger companies with more than 50 employees increased their staff by a total of 90,000, but their employment growth rates still slowed compared to previous months.

On the other hand, not all sectors reduced their staff. While the manufacturing, construction, information, finance, and business and professional services sectors cut staff, the education and health services, leisure and hospitality, and natural resources and mining sectors increased their personnel.

While some economists say the stagnation in employment is likely due to consumers tightening their belts because of economic difficulties, a manufacturer survey published this week revealed that some companies have slowed hiring due to uncertainty regarding President Trump’s tariff policy.

However, Commerce Secretary Howard Lutnick told CNBC that tariffs have nothing to do with weak employment, instead blaming the government shutdown for squeezing small businesses.

Lutnick said that the administration’s acceleration of deportation proceedings was also a reason for this situation, but he predicted that employment trends would soon recover.

Nevertheless, the troubled labor market picture could give leverage to Fed officials who advocate for a deeper interest rate cut next week, as disagreements persist within the central bank over how aggressively to lower borrowing costs.