US Private Sector Sheds 32,000 Jobs in September, ADP Report Indicates

Private Sector Employment Declines Unexpectedly

Private sector employment in the United States saw a reduction of 32,000 jobs in September 2025, according to the latest ADP National Employment Report®, released on Wednesday, October 1, 2025. This figure sharply contrasts with economists' expectations, who had largely predicted a gain of 45,000 to 51,000 jobs for the month. The report, produced by ADP Research in collaboration with the Stanford Digital Economy Lab, indicates a significant weakening in the U.S. labor market.

Adding to concerns, ADP also revised its August 2025 employment figures downward from an initial estimate of a 54,000 job gain to a net loss of 3,000 jobs. This marks the first time since 2020 that the private sector has experienced job cuts for two consecutive months and represents the steepest monthly decline since March 2023.

Context Amidst Government Shutdown and Rate Cuts

The release of the ADP report takes on heightened importance as a government shutdown began today, potentially delaying the official monthly jobs report from the Bureau of Labor Statistics (BLS). This situation places the ADP data under increased scrutiny from market watchers and policymakers. The job cuts follow a recent decision by the Federal Reserve to cut interest rates in September, driven by concerns over a weakening employment landscape.

Dr. Nela Richardson, chief economist at ADP, commented on the findings, stating, '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 U.S. employers have been cautious with hiring.'

Sectoral Breakdown and Pay Trends

The job losses were widespread across various sectors. The service-providing sector accounted for the majority of the cuts, shedding 28,000 jobs. Within this sector, notable declines were observed in:

• Leisure/hospitality: -19,000 jobs
• Other services: -16,000 jobs
• Professional/business services: -13,000 jobs
• Financial activities: -9,000 jobs
• Trade/transportation/utilities: -7,000 jobs

The goods-producing sector also saw a reduction of 3,000 jobs, with losses in construction (-5,000) and manufacturing (-2,000), partially offset by gains in natural resources/mining (+4,000). Conversely, some sectors experienced growth, most notably education and health services, which added 33,000 jobs, and information, which gained 3,000 jobs.

In terms of business size, small and mid-sized businesses were primarily responsible for the job reductions, while large employers (those with more than 500 workers) collectively added 33,000 employees. Annual pay growth for job-stayers was reported at 4.5 percent, a slight increase from 4.4 percent in August, while pay growth for job-changers decreased to 6.6 percent from 7.1 percent in the previous month.

Benchmarking and Future Outlook

ADP also conducted its annual preliminary rebenchmarking of the National Employment Report in September, based on full-year 2024 results from the Quarterly Census of Employment and Wages. This recalibration resulted in an additional reduction of 43,000 jobs for September compared to pre-benchmarked data. The report underscores a cautious approach to hiring by U.S. employers, despite strong economic growth observed in the second quarter.