A job seeker speaks with a recruiter at the KeySource booth at the Mega JobNewsUSA South Florida Job Fair held at the Amerant Bank Arena on April 30, 2025 in Sunrise, Florida.
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Nonfarm payrolls rose slightly more than expected in November but slumped in October, while unemployment hit its highest level in four years, the Bureau of Labor Statistics reported Tuesday in figures delayed by the government shutdown.
Job growth was a seasonally adjusted 64,000 this month, better than the Dow Jones estimate of 45,000 and up from a sharp decline in October.
The unemployment rate rose to 4.6%, higher than expected and the highest level since September 2021. A broader measure that includes discouraged workers and those holding part-time jobs for economic reasons rose to 8.7%, peaking in August 2021.
In addition to the November report, the BLS released an abbreviated October count that showed a 105,000 decline in payrolls. Although there was no official estimate, Wall Street economists largely expected a decline after a surprise rise of 108,000 in September.
The fall in October was due to a sharp decline in public sector employment as deferred layoffs introduced at the start of the year came into effect. The number of public sector employees fell by 162,000 over the month and fell by another 6,000 in November.
October’s decline was the third time in six months that payrolls were net negative. The BLS report also showed that August’s numbers were revised down by 22,000 to show a steeper loss of 26,000, while the original September figure was revised down by 11,000.
The BLS had warned that the household survey used to calculate the unemployment rate would be affected by the effects of the shutdown for several months. Difficulties in collecting the October numbers led to the cancellation of both the labor market report and the closely watched consumer price index.
Despite the complications, the report painted a familiar picture of the labor market.
The labor climate remains marked by low hiring and firing rates and is also affected by strict border practices under President Donald Trump that have diverted workers away from the usual flow of immigrants.
Company figures showed that most of November’s gains came from a familiar source: Health care added 46,000 jobs, accounting for more than 70% of the total net gain. Construction increased by 28,000, while social assistance contributed 18,000.
On the other hand, transportation and warehousing lost 18,000 jobs, part of an ongoing trend of job losses in the sector. The leisure and hospitality industry also recorded a loss of 12,000.
“The U.S. economy is in an employment recession,” said Heather Long, chief economist at Navy Federal Credit Union. “The country added just 100,000 new jobs in the last six months. The majority of those jobs were in health care, an industry that is almost always hiring because of America’s aging population.”
However, the White House assessed the report positively.
“The strong jobs report shows how President Trump is repairing the damage caused by Joe Biden and creating a strong America First economy in record time,” White House press secretary Karoline Leavitt said in a statement. “Workers’ wages are rising, prices are falling, trillions of dollars in investment are flowing into our country, and the American economy is poised for a boom in 2026.”
From a policy perspective, the Federal Reserve has had to walk a difficult line between trying to head off further weakness in the labor market and guarding against a worsening of stubbornly high inflation.
At its last meeting, the central bank cut its key interest rate by a quarter of a percentage point, but signaled that the bar for further rate cuts was higher. The Fed has approved three consecutive cuts since September, cutting its key interest rate to a target range of 3.5% to 3.75%.
“Given the data disruptions, the Fed is unlikely to give much weight to today’s report,” said Kay Haigh, global co-head of fixed income and liquid solutions at Goldman Sachs Asset Management. “The December employment data report, which will be released in early January before the next meeting, will likely be a much more meaningful indicator for the Fed in deciding its near-term policy stance.”
Markets continued to think the chances of another rate cut in January were slim. According to CME Group’s FedWatch, the likelihood was about 24.4% after the jobs report, unchanged from Monday.
Fed officials have maintained that the labor market is not a source of inflation, and Tuesday’s jobs report backed up that claim.
Average hourly wages rose just 0.1% for the month, below the 0.3% estimate, and were 3.5% higher than a year ago, the smallest annual increase since May 2021.
The 0.1 percentage point increase in the unemployment rate was largely due to the growth of the labor force.
Over the two-month period, the number of household employees actually increased by 407,000. However, this was partially offset by an increase in the labor force of 323,000 as the participation rate rose slightly to 62.5%.
In other economic news, the Commerce Department reported Tuesday that retail sales were flat in September while forecast for a 0.1% increase, based on seasonally adjusted figures but not inflation-adjusted figures. However, excluding cars, sales rose 0.4%, beating the 0.2% estimate.
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