Private-sector employment growth in October returned to moderate levels, according to ADP’s latest estimates, reflecting a cautious rebound in the labor market. The release amplifies uncertainty over the Federal Reserve’s next policy move, especially after Fed Chair Jerome Powell’s comments last week that any cut to interest rates in December remains highly uncertain.
Job creation at U.S. private companies in October ticked slightly upward, with payroll processor ADP reporting an increase of just 42,000 positions. This modest uptick, released Wednesday, marks the first advance in ADP’s figures since July, following a 29,000 job decrease in September. However, the data suggests hiring remains sluggish despite a slight improvement over some previous months.
The gains were largely confined to specific service-driven industries, with education and health care collectively adding 26,000 jobs, and trade, transportation, and utilities contributing another 47,000. By contrast, manufacturing recorded a loss of 3,000 jobs, and the professional and business services sector shed 15,000 positions.
Meanwhile, economic activity in the services sector returned to expansion in October, say the nation’s purchasing and supply executives in the latest ISM Services PMI Report. The Services PMI registered at 52.4 percent and is in expansion territory for the eighth time in 2025.
Fresh data from CME Group’s FedWatch tool shows expectations for a rate cut at the Fed’s December 10 meeting have slipped to 62% following the ADP report, down from roughly 86% before the central bank’s most recent meeting and subsequently dropping into the mid-60s range.
Chair Powell also noted a shift in the job market’s fundamentals, citing decreased immigration as a factor reducing the threshold for monthly job growth required to maintain stable unemployment. According to Powell, the economy now needs fewer than 50,000 new jobs each month to keep labor market conditions steady.
Additionally, Powell referenced a developing pattern among major corporations, which have been either scaling back hiring or implementing layoffs as they capitalize on gains in productivity driven by artificial intelligence. Nonetheless, the Fed chair reiterated that as long as inflation trends remain under control, the central bank is prepared to ease monetary policy further, aiming to bring the benchmark rate closer to a neutral stance, as reported by sources.
In a statement after the meeting in late October, he warned investors against betting on a third consecutive interest rate cut at the central bank’s December meeting, emphasizing that further policy easing is not assured. “A further reduction in the policy rate at the December meeting is not a foregone conclusion, far from it,” Powell stated during his post-meeting press conference.
