👀👀👉November ISM Data and ADP Job Losses Tilts Fed Toward Cut Amid High Expectations
The recent data from ISM and ADP released this week show mixed signals for the U.S. economy, which will likely influence the Federal Reserve's decision at next week's FOMC meeting amid high expectations for a rate cut.
Key points are:
👉ISM Manufacturing PMI contracted further to 48.2 in November 2025, marking nine straight months of contraction in manufacturing activity. New orders and employment in manufacturing declined, though production expanded slightly, and prices rose amid tariff concerns.
👉ISM Services PMI showed continued expansion at 52.6, slightly improved from October, signaling modest growth in the services sector. Employment in services contracted for the sixth month, but business activity and new orders remained in expansion.
👉ADP reported a decline of 32,000 private sector jobs in November, showing weakness in the labor market. Annual pay rose 4.4% year-over-year, but the employment contraction contrasts with prior months of job growth, indicating caution about labor market health.
How this influences the Fed FOMC decision:
👉The persistent contraction in manufacturing and the overall decline in private sector employment highlight slowing economic momentum and weak labor market conditions.
👉The modest expansion in services and steady price pressures show some underlying resilience but also ongoing challenges like tariffs and supply disruptions.
👉Given these mixed signals and the recent labor market weakness, the Federal Reserve is likely to consider this data as supportive of a cautious stance with potential for a rate cut to stimulate growth and employment.
This data aligns with market expectations of a possible Fed rate cut next week, aiming to support economic expansion amid manufacturing contraction and weakening job growth.