If the Federal Reserve needed any encouragement toward easing, the latest ADP numbers are pushing in that direction. Instead of modest job gains, private employers shed 32,000 positions in November, with pay growth cooling to 4.4% year over year.
"Hiring has been choppy of late as employers weather cautious consumers and an uncertain macroeconomic environment. And while November’s slowdown was broad-based, it was led by a pullback among small businesses,” said ADP chief economist Nela Richardson.
Zooming out provides a clearer picture. The Conference Board's labor differential—which tracks those saying jobs are "plentiful" versus "hard to get"—has been sliding for months.
Late Cycle Dynamic
In fact, it has followed the classic late-cycle script almost perfectly: first a cooling in hiring, then softer wage growth, then sentiment rolling over.
That sequence has repeated across multiple cycles, and once again, the survey data is capturing what the harder numbers (job openings, payrolls, weekly ADP pulse readings) have already been signaling. The labor market isn't collapsing, but it's unquestionably decelerating.
FED Funds Rate vs Conference Board Consumer Confidence Index, Source: TradingView
An overlay shows the relationship between the FED funds rate and the Consumer Confidence Index. Where data goes, FED soon follows.
Not because it targets the survey directly, but because the survey reflects the underlying dynamics that matter most for policy—slower hiring, less bargaining power for workers, fading wage pressure, and softer demand.
It is an exact ingredient of an environment where keeping rates too high for too long risks unnecessary damage.
FED Shifting Tone
At the latest FED meeting, Chairman Jerome Powell wasn't ready to call December's rate cut a done deal. But the tone around him has shifted.
New York Fed President John Williams said he sees room for cuts in the "near term." Governor Christopher Waller has been even more explicit, pointing to rising labor-market vulnerabilities as justification for easing sooner rather than later, Reuters reported.
Markets have taken the hint: CME FedWatch odds for a December cut have surged from roughly one-third after the October meeting to nearly 90% today.
ADP's weekly pulse data had already turned negative before the monthly headline drop. Small-business hiring indexes are stabilizing at low levels. Even jobless claims, still low, have stopped improving.
None of this data screams recession, but all of it points to a labor market that no longer justifies restrictive policy.
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