The U.S. private sector saw a decline in employment for September, shedding 32,000 jobs, according to the latest ADP National Employment Report released Wednesday. Despite the drop in overall headcount, annual pay growth for job-stayers remained robust at 4.5% year-over-year.
The report, produced by ADP Research in collaboration with the Stanford Digital Economy Lab, signals a continued cooling in the labor market, with U.S. employers exercising caution in their hiring decisions.
“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,” Nela Richardson, chief economist, ADP said.
Job losses across multiple sectors
The net job loss of 32,000 in September reflects a broad slowdown, with job creation losing momentum across most sectors. The headline figure includes a reduction of 43,000 jobs due to a preliminary rebenchmarking based on full-year 2024 results from the Quarterly Census of Employment and Wages (QCEW).
Losses were concentrated in the Service-providing sector, which contracted by 28,000 jobs. Key areas of decline included:
- Professional/business services: -13,000
- Leisure/hospitality: -19,000
- Financial activities: -9,000
The decline was somewhat offset by the Education/health services sector, which added 33,000 jobs. The Goods-producing sector also saw a small contraction, shedding 3,000 jobs.
Small and medium firms drive contraction
The September data indicates that smaller companies were the most affected by the job shedding:
- Small establishments (1-49 employees) led the decline, cutting 40,000 jobs.
- Medium establishments (50-499 employees) followed, losing 20,000 jobs.
- In contrast, Large establishments (500+ employees) remained the sole driver of growth, adding 33,000 jobs.
Geographically, the Midwest saw the sharpest decline, losing 63,000 jobs, while the Northeast (+21,000) and the West (+15,000) saw net gains.
Pay insights show steady growth
Despite the cooling employment trend, wage growth for existing workers remained stable:
- Job-stayers saw their median annual pay increase by a consistent 4.5%.
- Job-changers saw a deceleration in pay gains, slowing to 6.6% in September from 7.1% in August. The slowdown in pay growth for job-changers was most notable in the Leisure/hospitality and Financial activities sectors.
Median pay growth for job-stayers was highest at 5.2% in the Financial activities sector and averaged near 4.8% for large and medium firms.
