• Private sector employment fell by 32,000 jobs in November, a stark miss against expectations for a 10,000 gain.
  • The decline marks a second consecutive month of job losses and a significant deceleration from earlier in the year.
  • Wage growth for job-stayers held steady at 4.5%, suggesting pay pressures remain even as hiring stalls.

In a surprising turn for the U.S. labor market, private employers cut 32,000 jobs in November, according to the closely watched ADP National Employment Report released Wednesday. The figure, based on anonymized payroll data from over 26 million workers, sharply contradicts the median forecast from economists who had anticipated a modest gain of 10,000 positions.

The November contraction follows a revised loss of 29,000 jobs in September and a tepid gain of 42,000 in October, painting a picture of a labor market that has lost considerable momentum since July's more robust addition of 106,000 jobs. Preliminary weekly data, known as the NER Pulse, had hinted at weakness, showing an average loss of 13,500 jobs per week for the four-week period ending November 8.

"The data suggests the hiring spree we saw earlier this year has definitively cooled," said an analyst familiar with the report's methodology. "We're seeing a rebalancing where demand for new workers is softening, but the pressure on wages for existing employees hasn't fully abated."

Indeed, the report indicated that year-over-year pay growth for workers who remained in their jobs held flat at 4.5% in November, mirroring the pace seen in October. For those changing jobs, pay growth was 6.7%. This resilience in wages, even amid job losses, points to a complex dynamic where employers are pulling back on hiring but are not yet in a position to aggressively suppress compensation for their current workforce.

The details of the prior month's report, which provides a sectoral breakdown, showed the recent gains were narrowly concentrated. In October, large establishments with 500 or more employees added 73,000 jobs, while small and medium-sized businesses shed positions. The service-providing sector drove all the growth, adding 33,000 jobs, while goods-producing sectors eked out a mere 9,000 gain.

Market reaction was muted but pointed, with Treasury yields dipping slightly on the news as investors weighed the increased likelihood of a more accommodative monetary policy stance from the Federal Reserve. The report arrives just days before the government's official November employment data, setting a downbeat tone and raising the stakes for that broader release.

Efforts to reach ADP for additional comment on the November breakdown were not immediately successful. The firm typically releases more granular details on industry and region with its full monthly publication.

Correction: An earlier version of this article misstated the preliminary weekly job loss figure. It was an average of 13,500 jobs per week for the four weeks ending November 8.