U.S. Jobs Report Stuns: Private Payrolls Fall by 32,000, Markets Brace for Fed Pivot

One of the first major updates on the American jobs market post government shutdown couldn't have left a grimmer outlook on the state of the economy.

November’s ADP Employment Report revealed that private payrolls fell by 32,000 jobs, a shocking reversal from October’s gains.

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The contraction was driven largely by small businesses shedding, as firms with 50 employees or fewer shed 120,000 jobs in November. This data shows that small businesses are walking on thin ice when compared to larger companies, as firms with over 500 employees actually added 90,000 jobs in this last round. 

While manufacturing and technology sectors remained stable, services hiring slowed sharply, with leisure, hospitality, and trade showing the steepest declines.

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Markets React to Slowing Jobs Growth

A slowing jobs market has been the main culprit that led the Fed to reassess its monetary policy. With inflation seemingly under control, given that there were very few inflationary spikes over the year, the Federal Reserve began lowering interest rates in September, in an attempt to stabilize employment. 

There have been two interest rate cuts since -- and today's data reinforces the idea that the Fed will lower rates once again at the December 10 FOMC meeting. 

With the jobs market signaling that it is still in need of help, futures market pricing the Fed's decision is now showing close to a 90% chance that the Committee will cut interest by 0.25% on December 10. 

As expected, speculative markets responded favorably to the increase in rate cut probability. 

Equity markets rallied on the news, with the Dow Jones Industrial Average climbing more than 480 points and the S&P 500 advancing 0.45%. Meanwhile, gold surged past $4,200, going on a 1.2% run before correction. 

Bitcoin reached as high as $93,555 right after the jobs reports dropped, currently trading on a near 3% increase over the last 24 hours.