The U.S. private‑sector economy lost 32,000 jobs in November 2025 — a surprising downturn led primarily by small businesses. According to a payroll‑processing report from ADP, firms with fewer than 50 employees shed roughly 120,000 jobs, while larger companies (50+ employees) added about 90,000, resulting in a net private‑sector loss.
Small Businesses Under Pressure
The drop in small‑business employment is not entirely unexpected, as earlier 2025 data had shown weakening trends across the sector. According to the Intuit QuickBooks Small Business Index, small business employment fell by 24,600 jobs in October alone — a 0.19% decline compared with September — affecting 11 out of 12 tracked industry sectors.
Meanwhile, the decline in early 2025 had been more severe: small enterprises shed nearly 433,500 jobs in the first quarter, roughly a 3.5% drop.
Some of the most affected industries in November included manufacturing, construction, information, finance, and business services — while sectors like health, education, and hospitality saw modest payroll growth.
Structural Challenges and Uncertain Demand
Analysts suggest multiple factors may be driving the slump. Rising concerns over economic uncertainty — including higher interest rates, tariff policies, and consumer belt‑tightening — are weighing on hiring decisions.
According to one labor‑cost survey, many small businesses say labor quality and wage pressure remain major constraints.
Compounding the problem: many small firms are opting for a “wait and see” approach rather than expansion. For example, the Paychex Small Business Employment Watch index — which tracks firms with fewer than 50 employees — noted that through the first half of 2025, the small‑business labor market hovered near stability, with little appetite for hiring amid macroeconomic uncertainty.
What’s Next
With small businesses typically serving as an economic bellwether, these recent losses could signal broader softening if the trend persists. The upcoming official employment report from the Bureau of Labor Statistics (expected December 16) will be closely watched — in particular for signs of further contraction in small‑business payrolls.
Policymakers and business owners alike will be monitoring not just employment numbers, but also consumer demand, input costs, and policy developments that could either stabilize or further strain the small‑business sector.
