September Nonfarm Payrolls Report Delayed, ADP Shows Private Payrolls Drop 32,000

The release of the September nonfarm payrolls report has been delayed due to the U.S. government shutdown, leaving investors and analysts to rely on the ADP private payroll data for insights into the labor market. This situation raises uncertainty around the official employment data, which is critical for assessing the economy's health and informing Federal Reserve policy decisions. The ADP report, however, indicates a sharp decline in private sector employment, signaling a continued cooling in the labor market.

Introduction

The nonfarm payrolls report is a key economic indicator used to gauge the health of the labor market and is closely watched by the Federal Reserve when making monetary policy decisions. The data provides a comprehensive view of employment trends, including the number of jobs added, sectors with the most growth, and wage changes. In a broader economic context, the report is a barometer for overall economic activity and is essential for determining the direction of interest rates. The U.S. government shutdown, however, has disrupted the usual release of this data, forcing reliance on alternative measures like the ADP private payroll report to understand employment trends.

Data Overview and Context

The ADP National Employment Report, a monthly measure of private sector employment in the U.S., revealed that private employers shed 32,000 jobs in September 2025, according to the latest available data. This marked the largest decline since March 2023 and followed a downward revision of 3,000 jobs in August (initially reported as an increase of 54,000). The consensus expectation for September had been a gain of 50,000 jobs. The report covers employment at private businesses only and does not include government jobs, which are captured in the official nonfarm payrolls report.

| Month | ADP Payroll Change (Thousands) | Consensus Estimate (Thousands) |
|-------|-------------------------------|-------------------------------|
| September | -32 | 50 |
| August | -3 | 54 |

The ADP data is derived from payroll records of over 26 million U.S. workers and is often used as a precursor to the more comprehensive nonfarm payrolls report. While the two reports are not directly comparable, the ADP data can provide a general sense of labor market momentum before the official numbers are released.

Analysis of Underlying Drivers and Implications

The ADP data highlights a broader trend of slowing hiring in the U.S. labor market, driven by a combination of economic challenges such as tariffs, artificial intelligence adoption, and ongoing geopolitical tensions. Businesses, particularly small and medium-sized enterprises, have been cautious with hiring, while large firms added 33,000 jobs in September. The report also indicates that wage growth remained relatively stable at 4.5% on an annual basis, though the rate for those changing jobs slowed to 6.6% from 7.1% in August.

The weak employment data raises concerns about the sustainability of the economic expansion and could signal a shift in the labor market from a period of high demand to one of caution. The Federal Reserve has already cut interest rates in response to weakening labor market conditions, and further reductions may be on the horizon. However, the uncertainty around the nonfarm payrolls report complicates the Fed's ability to assess the true state of the economy.

Policy Implications for the Federal Reserve

The Federal Reserve typically relies on the nonfarm payrolls report to inform its interest rate decisions. The latest data delay means the Fed will have to rely more heavily on the ADP report and other indicators when considering its next move at the October 28–29 meeting. If the labor market continues to show signs of weakness, the Fed may decide to implement another rate cut. However, the central bank has also expressed concerns about the upside risks to inflation, suggesting that any easing will be measured and cautious.

The Fed's dual mandate—price stability and full employment—means that it must balance the risks of both inflation and unemployment. With wage growth remaining moderate and the unemployment rate at a relatively low 4.3%, the Fed has some room to maneuver. However, the potential for further deterioration in the labor market could force the Fed to act more aggressively.

Market Reactions and Investment Implications

The delayed release of the nonfarm payrolls report has introduced additional uncertainty into financial markets, with investors turning to the ADP data for guidance. The weak employment figures have already led to a sell-off in the U.S. dollar, as the market anticipates further rate cuts. The USD index fell by 0.27% following the ADP report, with the currency weakening against the Japanese yen and the euro.

Fixed income markets have also responded to the data. Treasury yields have declined, reflecting expectations of lower borrowing costs. Equity markets remain mixed, with investors weighing the risks of a slowing economy against potential gains from rate