How fast is the economy shedding jobs?

The ADP NER Pulse

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ADP NER Pulse of Private Jobs

Q: What Is the NER Pulse?
A: Three times a month, Main Street Macro releases the NER Pulse, an estimate of the week-over-week change in employment based on a four-week moving average. These releases are seasonally adjusted and have a two-week lag to allow for more complete and accurate estimates of real-time employment trends. At the beginning of each month, we publish the National Employment Report, which is built on a reference week that includes the 12th day of the month. We do not publish the NER Pulse during NER release weeks.

For the four weeks ending Oct. 25, 2025, private employers shed an average of 11,250 jobs a week, suggesting that the labor market struggled to produce jobs consistently during the second half of the month. These numbers are preliminary and could change as new data is added.

How Slow Is Too Slow?

Last week, The ADP National Employment Report showed that job growth had resumed in October after a two-month downturn, with private-sector employers adding 42,000 jobs.

The gain was welcome, but it wasn’t broad-based. Education and healthcare, and trade, transportation, and utilities led the growth. For the third straight month, employers shed jobs in professional business services, information, and leisure and hospitality.

However limited, October’s reading was still positive, to the relief of many economists and investors. Among these market-watchers, there’s growing sentiment that job growth will remain slow for the indefinite future due to a reduced demand for and short supply of workers.

With labor supply and demand both slowing, economists are on the lookout for a new break-even rate. That’s the minimum number of jobs the economy needs to add each month to keep the unemployment rate steady. 

But over the next decade, it will be difficult to find and maintain a balance in the labor market.

Between 2010 and 2019, employment growth was steady.  Demographic and technological change has disrupted that constant.

Retirees are growing in number and the population growth of prime-age workers, people between 25 and 54, is slowing. New developments in artificial intelligence are changing the workplace.

The aging U.S. population will give health-care employment a consistent boost. Job growth in other sectors will depend on short-term demand fluctuations that are difficult to forecast in the presence of labor-changing technological advancements.

Not only is the pace of employment growth shifting lower, it’s doing so in a jagged path across occupations, industries, and geographies. Going forward, instead of being a stable constant, the break-even rate more likely will be constantly moving.

So, how slow is too slow? That will be an open question for years to come.

ADP vs ADP

Last week I commented Private Employers Added 42,000 Jobs in October, First Increase Since July

ADP reports a modest 42,000 jobs added. The BLS report will be delayed or cancelled.

Year-Over-Year Change in Employment

• Small: -68,000
• Medium: +327,000
• Large: +836,000

This is a huge problem because small businesses are the key driver for job growth.

Surprised by the Small Business Drop?

If so, you shouldn’t be. Tariffs are particularly hard on small businesses who have fewer means of tariff avoidance.

+42,000 or -45,000?

I was skeptical of the 42,000 gain. Now we see it more likely -45,000.

Q: How do we arrive at that?
A: -11,250 per week * 4 = -45,000

If that is in the ballpark, we are going to have a substantial negative revision in the next ADP national report.

ADP Stops Giving the Fed Access to Its Private Jobs Data

On October 22, I commented Flying Blind: ADP Stops Giving the Fed Access to Its Private Jobs Data

Since the government has restarted, I expect to see partial BLS jobs reports next week.

The establishment survey is automated so those reports will come out shortly.

The Weekly unemployment claims numbers are produced by the states but compiled by the BLS. I expect that data will come out next week as well.

The unemployment rate is based off a Household Survey that was not taken. If the BLS comes up with anything, it won’t be based on anything (which some may sarcastically ask, what’s the difference?)

PEW on ADP

ADP is a huge sample but is not without issues as noted by Pew Research.

The BLS jobs report comes from two surveys: one of 60,000 households (which generates the unemployment rate) and the other of 121,000 business establishments (which generates the payroll employment figures). ADP bases its report on anonymized, aggregated payroll data from its clients. It measures job growth or shrinkage by comparing employers’ payrolls in a given pay period with those from the previous pay period.

Those differences mean the ADP data can’t perfectly substitute the BLS data. For one thing, the ADP data isn’t representative of the entire economy; the company’s client base tilts more toward mid-sized businesses than the BLS employer survey does. The ADP data also excludes government workers entirely and doesn’t allow as detailed of an analysis as the BLS datasets. (If you want to know how many leisure and hospitality jobs there are in Athens, Georgia, the BLS is where you want to go.)

But the two data series share some important similarities. Both use the week that includes the 12th of each month as their monthly reference point (though ADP releases new data weekly). And both use the BLS’s Quarterly Census of Employment and Wages, or QCEW, to benchmark and revise their monthly estimates. The QCEW comes from employers’ unemployment tax filings and covers more than 95% of all U.S. jobs. But it has a time lag of several months and was last published in September (covering the first quarter of 2025).

It is the weighting issue and time-lag issues that have bothered me the most. And the BLS does not do a small-medium-large breakdown so we have no comparison at all.

ADP shows small businesses are shedding jobs. The BLS has no breakdown.

I suspect both are underweight small and overweight large but I cannot prove it.

Q: Why?
A: BLS sampling and response rates.

Large- and medium-sized businesses are far more likely to respond to BLS surveys than small businesses. And small businesses that are struggling are more likely to not respond at all. Certainly, businesses that are out of businesses will never respond. So there is a survey return bias that is huge.

The BLS tries to make up for this sample bias with its ridiculous Birth-Death model that woefully lags because it is based on QCEW data that woefully lags.

Regardless, ADP does show a trend that I have long expected. Small businesses are in trouble and tariffs have exacerbated the problem.

Since small businesses are the largest employers by far, the BLS is missing the boat. If ADP has overweighted medium-sized businesses it has similar issues.

Revelio to the Rescue?

On November 7, I noted Revelio’s Realistic Assessment of the US Labor Market and Jobs – Sinking Fast

Kudos to Revelio for providing an excellent set of jobs-related data.

RPLS is a freely available macroeconomic labor market set of statistics built from 100+ million U.S. profiles to provide a clear view of workforce dynamics. It follows a format similar to the U.S. Bureau of Labor Statistics (BLS), tracking employment levels, wages, and job transitions at a scale that traditional surveys cannot, offering a continuous picture of the labor market. RPLS intends to close the growing information gap and deliver unbiased data on the U.S. workforce for policymakers, businesses, and the public.

Year Over Year Change

• January 2022: 4.585 million
• January 2023: 3.466 million
• January 2024: 1.436 million
• January 2025: 561 thousand
• October 2025: 203 thousand

Revelio noted the same thing as ADP regarding expanding sectors.

The only two big bright spots were Education and Health Services (related to aging demographics and illegal immigration), and Financial Activities (related to AI and stock market deals).

Cost Cutting Hits Jobs. October Layoffs Surge to Highest Level in 20 Years

On November 6, I noted Cost Cutting Hits Jobs. October Layoffs Surge to Highest Level in 20 Years

The jobs hit parade is running in reverse. Hiring lowest in 14 years.

And to wrap things up, a Richmond Fed survey suggests I have been right about tariff impact on small businesses. For discussion, please see Richmond Fed Survey Shows Small Businesses Impacted More by Tariffs

Local business conditions are negative for small and mid-sized businesses.

Link Recap

• ADP: On November 6 I noted Private Employers Added 42,000 Jobs in October, First Increase Since July
• Revelio: On November 7, I noted Revelio’s Realistic Assessment of the US Labor Market and Jobs – Sinking Fast
• Challenger & Gray Layoffs: On November 6, I noted Cost Cutting Hits Jobs. October Layoffs Surge to Highest Level in 20 Years
• Richmond Fed: On November 6 I noted Richmond Fed Survey Shows Small Businesses Impacted More by Tariffs

I have many excellent charts in the links discussed. Please click on some of the above for more details and graphs.

Anyone who says the economy is on strong footing needs to explain 5 posts (counting this one) that suggest otherwise.

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