(Dec 16): US job growth remained sluggish in November and the unemployment rate rose to a four-year high, pointing to a continued cooling in the labour market after a weak October.
Nonfarm payrolls increased 64,000 in November after declining 105,000 in October, according to Bureau of Labor Statistics (BLS) data out on Tuesday. The unemployment rate was 4.6% last month, up from 4.4% in September. The BLS had to forgo publishing an October jobless rate because it was unable to retroactively collect that data following the government shutdown.
The decline in October payrolls, which was the largest since the end of 2020, was due to a 162,000 contraction in federal government employment as workers who accepted the Trump administration’s deferred resignation offers officially dropped off payrolls.
The advance in November payrolls, following an October pullback, adds to the choppiness seen in the labour market in recent months. The unemployment rate, however, continued its upward climb, as many out-of-work Americans struggled to land new jobs. While the data come with caveats, the report will help inform investors’ expectations for the path of interest rates next year.
The Federal Reserve lowered rates for a third straight meeting last week to support what chair Jerome Powell called a “gradually cooling” labour market with “significant” risks of a further slowdown. However, Fed officials are split over whether more cuts are needed next year.
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The median Fed official penciled in just one reduction in 2026, according to rate projections released alongside the decision, but some policymakers see no further cuts. Traders, meanwhile, have been counting on two.
“The labour market remains weak, but the pace of deterioration probably is too slow to spur the FOMC to ease again in January,” said Samuel Tombs, chief US economist at Pantheon Macroeconomics, referring to the Fed’s policy-setting Federal Open Market Committee.
The S&P 500 opened lower, while the two-year Treasury yield fluctuated and the dollar remained down. A separate report out on Tuesday showed retail sales were little changed in October as a decline at auto dealers and weaker gasoline receipts offset stronger spending in other categories.
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Industry breakdown
The advance in November payrolls was driven by healthcare and social assistance as well as construction. Private payrolls increased by 69,000 in November after adding 52,000 jobs the prior month. Employment fell in transportation and warehousing as well as leisure and hospitality.
“Both October’s and November’s jobs prints appear weak. There’s a glimmer of [very gradual] improvement in private-sector hiring, with AI data-centre demand providing some hiring impetus for construction workers. But the concentration of hiring is worrisome — and in hindsight, the FOMC was correct to cut rates at the December meeting,” say Anna Wong, Stuart Paul and Chris G Collins, economists at Bloomberg Economics.
The rise in the unemployment rate from September to November reflected a surge in those returning to the workforce. The participation rate — the share of the population that is working or looking for work — also ticked higher. The rate for workers age 25-54, also known as prime-age workers, edged up from September.
Meanwhile, the number of people who are long-term unemployed — or out of work for 27 weeks or more — rose to one of the highest levels since the end of 2021. Those working part time for economic reasons jumped by the most since the onset of the pandemic.
The unemployment rate for Black Americans jumped to 8.3%, the highest since 2021, in part reflecting increased participation. The jobless rate also surged for Black teenagers.
| Metric | Actual | Median estimate |
|---|---|---|
| Change in Nov. payrolls (MoM) | +64k | +50k |
| Unemployment rate | 4.6% | 4.5% |
| Average hourly earnings (MoM) | +0.1% | +0.3% |
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Other data also suggest the labour market is sluggish. US job openings picked up in October, though there was less hiring and more layoffs. Planned layoffs have been high in recent months, reflecting announcements from US companies like Verizon Communications Inc. and Amazon.com Inc and subsequently weighing on consumer sentiment.
Shutdown impact
The BLS cancelled the October jobs report and combined that month’s payrolls with the November release because of the record-long government shutdown. While it wasn’t able to conduct the household survey retroactively to produce an unemployment rate for October, the payrolls number is derived from a separate survey of businesses that many firms independently report online.
The government shutdown impacted the figures in other ways too.
Federal payrolls fell another 6,000 in November after the biggest one-month plunge since 2010. About 144,000 federal employees took the administration’s deferred resignation offer, the Office of Personnel Management said last week, which allowed them to leave early in the year but still be paid through the end of September.
The agency also extended the collection periods for both the household and establishment surveys for November. The November report was originally due on Dec 5.
BLS said the November household numbers are slightly more variable than usual, due to a lower response rate and analysis over a two-month period instead of the typical one. Because the government reopened before the end of the November reference week, federal government workers were counted as employed.
“It is not possible to precisely quantify the effect of the federal government shutdown on household survey estimates for November,” the agency said.
Separately, the employment report showed average hourly earnings rose 0.1% in November after jumping 0.4% in the prior month. Economists pay close attention to this metric as a driver of household spending, which has become even more bifurcated as the wealthiest Americans disproportionately propel spending.
Uploaded by Felyx Teoh
