U.S. private sector businesses lost 32,000 workers in September as growing concerns about the economy kept employers from expanding their payrolls, according to data released Wednesday.

The ADP National Employment Report showed another steep drop in the private sector labor market, which has lost steam throughout 2025.

“Despite the strong economic growth we saw in the second quarter, this month’s release further validates what we’ve been seeing in the labor market, that U.S. employers have been cautious with hiring,” ADP chief economist Nela Richardson said.

Small businesses took the brunt of the damage in September. Businesses with fewer than 50 employees lost 40,000 jobs last month, and midsized firms — those with between 50 and 499 employees — lost 20,000 jobs.

Large companies of 500 employees or more offset the losses slightly with a gain of 33,000 jobs.

The ADP report is the latest red flag about the weakening job market. The U.S. had added an average of just 29,000 workers per month this year, and the unemployment has risen from 4 percent to 4.3 percent.

Economists have blamed the slowdown on a range of factors, including the financial strain and uncertainty caused by President Trump’s tariffs. The Trump administration’s deportation agenda has also taken thousands of workers out of the labor market, sapping productivity and consumer spending from the larger economy.

Rapid evolutions in AI have also shaken up the market for computer programmers and engineers, particularly recent college graduates, as tech companies shift more of their coding work to AI.

The Labor Department was scheduled to release the September jobs report Friday, but will not release or calculate any new economic data until lawmakers reach a deal to fund the federal government.