The latest report from payroll processor ADP indicates that the private-sector job market contracted slightly in September, shedding 32,000 positions. Though that headline number may sound troubling, economists and employers alike see positive signs in what it reveals: a cooling but stable labor market poised for long-term strength.
After two years of tight hiring conditions and record wage growth, September’s pullback may represent a healthy rebalancing. Smaller firms with under 50 employees reported the greatest job losses, while large businesses added 33,000 positions. Hiring remained strongest in healthcare, education, and information technology—industries that continue to invest in innovation and talent despite broader slowdowns in manufacturing and finance.
Cooling Inflation and Wage Stability
Wage growth for current employees continued to decelerate, a trend viewed positively by market analysts who say it supports the Federal Reserve’s goal of curbing inflation without triggering widespread job losses. When employers can maintain payrolls without bidding up wages too quickly, prices across sectors tend to stabilize, protecting both workers’ purchasing power and business competitiveness.
“Moderating wage growth is a sign of normalization,” said ADP’s chief economist in the report summary. “It means labor supply and demand are finding better balance.”
Resilient Sectors Show Growth
Healthcare and education added 33,000 positions in September, reflecting sustained demand for essential services. IT employment also rose modestly, consistent with continued investment in digital infrastructure and automation. These gains helped offset losses in construction and manufacturing—industries that often fluctuate seasonally and are sensitive to borrowing costs.
Leisure and hospitality saw a drop of 19,000 jobs, but the sector remains near pre-pandemic employment levels after significant recovery in 2024. Many analysts believe that a cooling pace in service-sector hiring indicates businesses are focusing more on productivity improvements rather than rapid expansion.
Small Businesses Face Pressure, Large Firms Hold Steady
Smaller businesses—those employing fewer than 50 workers—shed 40,000 jobs in September, continuing a trend that began earlier in the year. Economists attribute this to higher financing costs, tighter margins, and competition from larger employers able to offer stronger benefits and pay stability.
Yet even in that context, large employers with over 500 workers added 33,000 positions, underscoring the overall resilience of the U.S. economy. While small businesses often lead in innovation, large firms are better positioned to weather temporary headwinds and maintain hiring pipelines through market cycles.
Positioning for the Fourth Quarter
With wage pressures easing and inflation slowing, the broader economic outlook heading into the fourth quarter remains stable. Job losses in September mark only the third monthly decline of 2025, and analysts say they signal moderation rather than contraction.
Businesses across California, including those in the San Gabriel Valley, continue to prioritize retention, training, and sustainable payroll management—factors that strengthen local economies over time. For homeowners, consumers, and employers alike, a balanced labor market supports steadier prices, improved business confidence, and a foundation for long-term growth.
For more insights into national employment data, visit ADP Research Institute.
