More cracks are beginning to appear in the US economy
The United States private sector shed 32,000 jobs in September, according to the latest ADP National Employment Report, a figure that has already drawn the attention of economists and central bankers as questions mount over the reliability of official government labor statistics.
The ADP report, produced in collaboration with the Stanford Digital Economy Lab, is based on anonymized payroll data from more than 26 million US private-sector employees.
This month’s data, released amid a government shutdown that could halt Bureau of Labor Statistics (BLS) reporting, has taken on outsized significance for market watchers and policymakers.
The figures are further evidence of a slowing US economy, potentially keeping the door open for the Federal Reserve to lower interest rates at its next decision.
The central bank announced its first rate cut of the year in September, and decisionmakers including Stephen Miran have made the case for more reductions in the months ahead.
“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 US employers have been cautious with hiring,” Dr. Nela Richardson, ADP’s chief economist, said.
The US economy grew at its fastest pace in nearly two years in the second quarter, with gross domestic product (GDP) revised up to an annualized 3.8% rate, according to the Commerce Department’s latest estimate.
Job losses widespread, revisions deepen concerns
The report’s annual rebenchmarking, which aligns ADP’s numbers with the BLS’s Quarterly Census of Employment and Wages, resulted in a downward revision of 43,000 jobs for September.
The August figure was revised sharply from a gain of 54,000 to a loss of 3,000.
Job losses were widespread, with the goods-producing sector down 3,000 jobs and the service-providing sector down 28,000. Notably, education and health services bucked the trend, adding 33,000 jobs, while financial activities lost 9,000.
Regionally, the Midwest saw the steepest decline at 63,000 jobs lost, while the Northeast added 21,000. Small and medium-sized businesses bore the brunt, shedding 40,000 and 20,000 jobs respectively, while large firms added 33,000 positions.
Federal Reserve vice chair for supervision Michelle Bowman has once again called for interest rates to move lower, saying Friday that growing labor market risks mean the central bank will need to cut in the months ahead.https://t.co/O2eJyuUeQW
— Mortgage Professional America Magazine (@MPAMagazineUS) September 29, 2025
Pay growth steady, but labor market cools
Pay growth for job-stayers held steady at 4.5% year-over-year, while job-changers saw pay gains slow to 6.6% from 7.1% in August. Financial activities led pay increases for job-stayers at 5.2%. These figures, while positive, suggest a cooling labor market, especially as wage growth for job-changers moderates.
With the BLS potentially sidelined by a government shutdown, the Federal Reserve and market participants may have little choice but to lean more heavily on private data sources like ADP when assessing the labor market and considering future rate moves.
The coming weeks could see the ADP report—and others like it—move to the center of economic debate, shaping expectations for rate cuts and broader market sentiment.
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