Gold, Silver Hold Steady as Yields Fall and Dollar Softens on Surprise ADP Jobs Decline

Private Payrolls Drop by 32,000 in September as Shutdown Stalls Official Jobs Data

Private sector payrolls fell by 32,000 in September, marking the sharpest decline since March 2023 and sharply missing expectations for a 45,000 gain. The latest ADP National Employment Report, released Wednesday, gains outsized attention as the U.S. government shutdown delays critical labor market data, including nonfarm payrolls and weekly jobless claims. With no official data due before the Federal Reserve’s next policy meeting on October 28-29, the ADP print becomes a key input for rate expectations.

Sector Losses Deepen Labor Market Concerns

The labor market weakness was broad-based. Leisure and hospitality lost 19,000 jobs, signaling a slowdown in consumer-driven demand as summer travel winds down. Other services dropped by 16,000, professional and business services were down 13,000, trade and transportation declined by 7,000, and construction shed 5,000 jobs. The only major gain came from education and health services, which added 33,000 as schools reopened and healthcare hiring remained resilient.

Small Businesses Struggle While Large Firms Hire

Job losses were concentrated among small businesses, with firms employing fewer than 50 people cutting 40,000 positions. Mid-sized businesses (50–499 employees) also trimmed jobs, while large enterprises with 500 or more employees added 33,000 roles. This divergence highlights ongoing hiring caution among smaller employers, even as larger companies maintain workforce expansion.

Wage Growth Slows Despite Resilient Headline Pay

Wages rose 4.5% year-over-year in September, little changed from August, according to ADP. However, job switchers saw pay increases ease to 6.6%, down from 7.2% the previous month, suggesting some moderation in wage pressure. While the unemployment rate remains relatively low at 4.3%, Fed officials have signaled concern that labor demand may cool more than expected. Boston Fed President Susan Collins warned of increased downside risk to labor market strength.

Markets React Cautiously Ahead of Fed Decision

Following the ADP release, 10-year Treasury yields extended their pullback, the U.S. Dollar Index (DXY) softened, and gold and silver held steady. U.S. equity futures declined but were off session lows, reflecting trader uncertainty as a critical piece of macro data — the BLS payrolls report — remains delayed.

Market Forecast: Bearish Labor Signal Supports Rate Cut Bias

The unexpected decline in private payrolls, combined with the government data blackout and cautious tone from Fed officials, strengthens the case for a more dovish stance at the upcoming FOMC meeting. With wage growth cooling and hiring momentum fading, the labor market shows early signs of contraction. Traders should interpret the data as bearish for yields and potentially supportive for rate-sensitive assets if the Fed signals an upcoming cut.