#adpdatadisappoints ADP Data Disappoints: Small Business Collapse Signals Trouble
November's ADP report shocked markets. Private payrolls fell 32,000 versus expectations of a 40,000 gain. This marked the biggest decline since March 2023.
The damage isn't evenly distributed. Small businesses with fewer than 50 employees shed 120,000 jobs, while larger firms added 90,000. Small establishments—the economic backbone—are hemorrhaging positions at a rate not seen since the pandemic's early days.
Manufacturing lost 18,000 jobs. Professional services cut 26,000. Even information services dropped 20,000. Only education, healthcare, and leisure showed gains.
ADP's chief economist cited "cautious consumers and an uncertain macroeconomic environment" as hiring turned choppy. The six-month average now sits at its lowest level since 2020.
The Fed meets December 9-10 with this data in hand. Markets still price in a 25bp rate cut, but the labor market cracks are widening.
Small business weakness is the canary in the coal mine. When mom-and-pop shops stop hiring, the economic slowdown becomes self-reinforcing. Watch the January revision—it could get uglier.
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