U.S. lost 32,000 private-sector jobs last month in surprise drop, ADP data shows
(CBS NEWS) – According to CBS, private-sector employers in the U.S. cut 32,000 jobs in November, payroll firm ADP said Wednesday, a surprise drop that could firm up expectations of an interest rate cut next week.
Forecasts had predicted a rise in employment last month, with economists polled by FactSet expecting private employers to add more than 40,000 jobs.
“Hiring has been choppy of late as employers weather cautious consumers and an uncertain macroeconomic environment,” ADP chief economist Nela Richardson said in a statement.
Small businesses with fewer than 50 employees drove the cuts in November, shedding 120,000 jobs.
“The 31,000 decline in private payrolls reported by ADP was driven by firms with less than 50 employees,” Matthew Martin, senior U.S. economist at Oxford Economics, said in a report. “Small firms, those with less than 50 employees, have felt the pinch of policy uncertainty, rising input costs, and high interest rates the most.”
The labor market weakness was led by cuts in the professional and business services industry, where employers eliminated 26,000 jobs. The leisure and hospitality sector gained 13,000 jobs, as establishments gear up for the busy holiday season.
Although the ADP figures are not viewed as particularly predictive of overall job growth, they are still closely watched as a gauge of the U.S. economy, especially as official data is incomplete due to the 43-day federal government shutdown that ended in November.
Employers across the U.S. added 119,000 jobs in September, marking a pickup after previous employment data had shown a slowdown in hiring.
Economists said the latest data from the payroll firm increases the odds that the Federal Reserve will pare its benchmark rate when policymakers meet on Dec. 9-10.
“There’s a high level of disagreement among Fed policymakers right now, but we maintain our call the doves will prevail over the hawks and the FOMC to vote for another 25bps interest rate reduction at next week’s meeting,” said Nationwide Financial Markets economist Oren Klachkin in a report, citing the darker picture painted by the ADP report.
