ADP, sharp setback in U.S. private-sector employment: 32,000 jobs lost in November

The ADP report surprises analysts and sends Treasury yields tumbling. Markets grow more convinced: the Fed will cut rates next week.

The U.S. labor market is losing momentum. In November, employment in the private non-farm sector fell by 32,000 jobs, overturning the 47,000 increase recorded the previous month (revised upward from the preliminary +42,000). Analysts had expected a modest gain of 5,000 jobs, but ADP’s monthly report delivered a negative surprise.

The contraction is driven by manufacturing, which shed 18,000 positions, while services saw a decline of 13,000 jobs, weighed down by steep drops in IT (-20,000) and professional services (-26,000). Construction was also weak, with 9,000 jobs lost.

The picture varies sharply by firm size: small businesses saw employment plunge by 120,000 positions, while medium-sized companies added 51,000 jobs and large companies increased headcount by 39,000.

The downside surprise in the ADP data quickly hit the bond market: Treasury yields fell sharply, reinforcing expectations that the Federal Reserve will cut interest rates at next week’s meeting. According to the FedWatch Tool, the probability of a rate cut now stands at 88.8%.

Andrea Pelucchi