NOVEMBER 2025 ISSUE

The labor market has started to show signs of a slowdown amid President Donald Trump’s economic policy chaos—especially his on-again, off-again tariffs, mass deportations, and ad hoc cuts to the federal government, among other policies. The accumulation of data over the past few days and weeks shows that the labor market slowdown continued into September. While it is clear that the labor market remained weak last month, it is difficult to gauge exactly how weak because the Bureau of Labor Statistics (BLS) did not release its monthly jobs report amid the government shutdown, resulting in a lack of high-quality government data.

The private sector, specifically, may have lost jobs in September. Payroll processing firm ADP reported that private sector payrolls dropped by 32,000 jobs in September. Over time, the ADP data, which use BLS data as weights to match the composition across industries, appear to be in line with the private sector employment data from the BLS, although they can differ on a month-to-month basis.

A comparison between the two data sources for the six months from March to August 2025 illustrates this point: The ADP data show a total gain of 316,000 private sector jobs and the BLS payroll survey data show a gain of 404,000 jobs during this period. Moreover, both data sources show a noticeable slowdown from the first three months of this period—March to May 2025—to the second three-month period of June to August 2025. (see Figure 1) The two surveys provide similar information, with the private sector job losses detailed in the latest ADP report indicating continued slow job growth, even without BLS data to back them up.

Other data further confirm the weak labor market outlook through September. Corporate restructuring firm Challenger, Gray & Christmas reported on October 2, 2025, that private sector employers announced hiring plans for an additional 204,939 employees, the lowest number since 2009—during the height of the Great Recession.

Government employment likely further worsens the slowdown in the private sector. In the six months ending in August 2025—the most recent month for which BLS data are available—total government employment fell by 19,000 jobs. Meanwhile, federal jobs dropped by 84,000, state government jobs declined by 21,000, and local government jobs grew by 86,000 during those months. Cuts to federal government jobs have posed a drag on the labor market, even before September.

This drag will likely accelerate in October, as severance pay and other transition mechanisms ended for many government employees on September 30, 2025. An estimated 100,000 federal civilian government employees exited federal employment by the end of last month, but those losses will not show up in BLS data until the next survey data are released in early November.

The exact details of the labor slowdown will not be known until the BLS releases its data after the government shutdown. But there is no doubt, based on various data points, that the labor market remained in a weak spot in September.

Christian E. Weller is CAP Senior Fellow.