Small Businesses Lead Surprise Drop in U.S. Private Payrolls

By Reuters | The Denver Gazette

WASHINGTON – U.S. private payrolls unexpectedly declined in November as small businesses shed jobs, but the weakness is probably not a true reflection of the labor market’s health, with recent government data showing layoffs remaining at low levels late last month.

Economists also cautioned against reading too much into the ADP employment report published on Wednesday, arguing its monthly estimate has historically diverged from the government’s private payrolls count produced by the Labor Department’s Bureau of Labor Statistics.

“It is too loosely correlated with the official data to be troubling,” said Samuel Tombs, chief U.S. economist at Pantheon Macroeconomics. “It would be unwise to lower forecasts for the official data, however, on the back of ADP’s number, given its awful track record.”

Private employment decreased by 32,000 jobs last month after an upwardly revised 47,000 increase in October, the ADP report showed. Economists polled by Reuters had forecast private employment rising by 10,000 jobs after a previously reported 42,000 rebound in October.

Small establishments lost 120,000 jobs last month, which some economists attributed to tariffs on imports that have raised costs for businesses. Payrolls at medium enterprises increased 51,000 while those at large businesses rose 39,000.

The ADP report is jointly developed with the Stanford Digital Economy Lab. The BLS will release the closely watched employment report for November on Dec. 16.

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