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By Hugh Cameron
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The latest jobs report from the Department of Labor, significantly delayed due to the 43-day government shutdown, has hammered home long-standing concerns over a labor market slowdown and challenged some of the administration’s optimism regarding the employment situation in the U.S.
On Thursday, the Bureau of Labor Statistics (BLS) released a combined employment reading for the past two months, finding that the economy shed 105,000 jobs in October and failed to rebound with only 64,000 added in November. October's figures were heavily affected by layoffs within the government, as this was the month when many federal employees who accepted the administration's deferred resignation offer came off the payroll.
The unemployment rate, meanwhile, rose from 4.4 percent in September to 4.6 percent in November, reaching its highest level since September 2021. No unemployment rate was calculated for October, as the BLS had confirmed would be the case due to data collection issues caused by the shutdown.
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Market analyst Daniela Hathorn, in comments shared with Newsweek following the report, said, in part, "All told, this is consistent with a labor market that is losing steam rather than overheating.”
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Why It Matters
Prior to the latest report, alarm signals were already sounding due to a monthslong hiring slowdown and a recent surge in job cut announcements, which had upset Fed Chair Jerome Powell’s cautious September diagnosis that the labor market was a “low-hire, low fire” environment.
Some of Tuesday’s figures came in ahead of expectations and healthy gains were made in private payrolls, but a downward revision to past months’ data and the four-year high unemployment rate contrasts with the White House’s recent labor market appraisal—issued following last month’s report—that “President Trump’s pro-growth, America First agenda is already making great progress.”
What To Know
Analysts had previously penciled in lower gains of around 50,000 jobs in November, and Trading Economics had forecast the addition of 55,000 in October, reflecting the uncertainty about how laid-off federal workers would be classified in this combined report.
As the BLS noted, federal government employment declined by 6,000 in November following a loss of 162,000 in October, “as some federal employees who accepted a deferred resignation offer came off federal payrolls.” In total, the agency said federal government employment is down 271,000 from its peak in January.
Revisions were also made to past months’ data, with August and September's figures revised down by 22,000 and 11,000 to -26,000 and 108,000, respectively—meaning total job gains were together 33,000 lower than previously reported.
In line with recent trends, November’s gains were heavily concentrated in healthcare and social assistance, rising by 46,000 and 18,000 jobs, respectively, with construction also seeing a 28,000 increase. However, transportation & warehousing declined by 18,000, which the BLS said reflected job losses among couriers and messengers.
In addition to overall unemployment rising to a four-year high, the number of Americans employed “part time for economic reasons”—i.e., wanting full-time work but unable to find it—increased by 909,000 between September and November to reach 5.5 million.
During a press conference last week, Fed Chair Powell warned that much of the data contained in the report could be “distorted” due to the Labor Department’s difficulty in conducting its usual collection activities amid the shutdown, and said the central bank would "have to look at it carefully and with a somewhat skeptical eye" ahead of its late-January policy meeting.
Powell added that this set of monthly payroll numbers—as in the past—would likely be revised down when the BLS conducts its next biannual review, and that initially reported figures could be overstated by “about 60,000 a month.”
What People Are Saying
Bankrate senior economic analyst Mark Hamrick told Newsweek: “The good news is that we finally get federal data on the job market after the logjam caused by the government shutdown. The not-so-good news is that it isn’t pretty.
"Fed Chair Jerome Powell said last week that payroll numbers may be overstated by up to 60,000 jobs a month,” he added. “Translated, that means the job market could be weaker than it looks."
Heather Long, chief economist at Navy Federal Credit Union, posted to X: “The US economy is in a hiring recession. Almost no jobs have been added since April. Wage gains are slowing. 710,000 more people are unemployed now versus November 2024.”
Kevin Hassett, director of the National Economic Council, told CNBC on Tuesday morning: “We dropped about 160,000 government workers—federal government—who are the people who took the buyout that, you know, we began that program in spring and gave people till the fall to step aside. And so, I think that from the private sector point of view it’s just about what we’ve been getting all year. It’s [a] solid upward trajectory.”
Nancy Vanden Houten, lead U.S. economist at Oxford Economics, in comments shared with Newsweek: “Private payrolls have expanded an average 75,000 over the last three months, well above our estimate of the break-even monthly job growth rate of 30,000, although there is a good chance these job gains are being overstated and will eventually be revised lower.”
Market analyst Daniela Hathorn, in comments shared with Newsweek following the report, said: “The figures confirm that job growth remains modest and the labor market continues to slow, with 64,000 payrolls added in November after a dip in October, a clear deceleration from prior months. The unemployment rate rose slightly higher than expected at 4.6 percentage**,** further softening from earlier in the year, and wage growth continues to ease modestly compared with previous months. All told, this is consistent with a labor market that is losing steam rather than overheating.”
What Happens Next
Analysts are split on how the data could impact the Fed’s next moves, Hathorn writing that the “softer jobs picture reinforces the view that the labor market is no barrier to further Fed easing,” but Vanden Houten of Oxford Economics saying the figures reinforce the belief that it is “steady enough for the Federal Reserve to keep policy on hold until mid-2026.”
The CME FedWatch tool currently gives a 73 percent chance of no change at the late-January, slightly lower than prior to the release and with a better odds of another cut.
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