U.S. employers cut 32,000 jobs in November, deepening signs of a cooling labor market just as Federal Reserve officials prepare for a pivotal interest rate decision next week, according to new data from ADP.
The private payroll report shows a particularly sharp contrast between small and large businesses. Companies with fewer than 50 workers shed 120,000 jobs last month, while larger employers collectively added 90,000 positions. ADP also noted that pay growth continued to moderate. Workers who stayed in their roles saw wages rise 4.4%, while job changers received an average pay bump of 6.3%.
“Hiring has been choppy of late as employers weather cautious consumers and an uncertain macroeconomic environment,” said ADP Chief Economist Nela Richardson.
The labor softness is feeding into financial market expectations that the Fed could move forward with another rate cut at its Dec. 9–10 meeting. Interest rate futures traders now assign an 89% probability of a quarter-point reduction, up from 83.4% one week earlier.
The federal funds rate currently sits at 3.75% to 4%, a level some policymakers argue is too restrictive given weakening job market indicators. Several Fed officials have signaled openness to a third consecutive rate cut, citing rising layoff announcements and slower hiring. Others remain focused on inflation, which remains above the Fed’s 2% target, and warn that easing too quickly could trigger renewed price pressures.
Minutes from the Fed’s October meeting highlighted this internal divide. Policymakers “expressed strongly differing views about what policy decision would most likely be appropriate at the committee’s December meeting,” the report noted.
This month’s ADP release carries unusual weight because the federal government shutdown delayed the Bureau of Labor Statistics’ official November jobs report until Dec. 16 — nearly six days after the Fed meeting concludes. That lapse has pushed markets and analysts to rely more heavily on ADP and other unofficial indicators.
Additional data points are also pointing to rising caution. The Fed’s Beige Book last week reported that “employment declined slightly over the current period with around half of districts noting weaker labor demand.” The report also highlighted that firms increasingly rely on hiring freezes, attrition and replacement-only strategies rather than mass layoffs.
Consumer sentiment aligns with the same trend. According to the Conference Board, “Mid-2026 expectations for labor market conditions remained decidedly negative,” with only 27.6% of consumers describing jobs as “plentiful.”
Small-business hiring intentions also slipped, with the National Federation of Independent Business reporting that 56% of owners were hiring or trying to hire in October — down two points from the previous month.
Although the overall employment picture has not deteriorated sharply, the combination of slowing wage growth, weaker hiring plans and sector-specific pullbacks suggests employers are shifting into a more defensive posture. With households tightening spending and borrowing costs still elevated, labor demand is likely to remain under pressure heading into early 2026.
The Fed’s December rate decision will now hinge heavily on these mixed but increasingly cautious indicators, making next week’s meeting one of the most consequential of the year.
Originally reported by Jim Tyson in Construction Dive.
