The unemployment rate rose more than expected in November and previous jobs figures were revised downward as the first full report after months of a data fog revealed a weakening labor market.
In November, the unemployment rate jumped to 4.6%, its highest level since September 2021 – up from 4.4% in September, the Bureau of Labor Statistics said Tuesday.
Hiring remained steady as US employers added 64,000 jobs in November, above expectations of a 50,000 increase, according to government data.
“For a data-dependent Fed, this morning’s data will only increase the internal debate,” Chris Zaccarelli, chief investment officer for Northlight Asset Management, said in a note on Tuesday.
“The labor market is weakening as evidenced by the higher unemployment rate, but the retail sales were generally better than expected.”
The Dow Jones Industrial Average and S&P 500 fell 0.6% and 0.3%, respectively. The Nasdaq ticked up 0.2% by approximately 3:24 p.m. ET.
According to the jobs report, which also included some data delayed by the government shutdown, payroll employment dropped by 105,000 in October – largely due to federal layoffs.
The federal government has lost 168,000 jobs since September as workers who took a deferred resignation come off payrolls.
Downward revisions to late summer and fall jobs data saw 33,000 jobs cut off the total figure.
In November, employment rose in the health care and construction sectors, adding 46,000 and 28,000 jobs, respectively – but other areas, like manufacturing and transportation and warehousing, lost workers.
The Federal Reserve – which slashed interest rates by a quarter point last week for the third time in a row on labor market concerns – will likely pay special attention to the unemployment rate.
Up from just 4% in January, central bankers last week forecast the unemployment rate would peak at 4.5% this year – below the 4.6% figure released Tuesday.
But Fed Chairman Jerome Powell also warned last week that the jobs numbers “may be distorted” and should be viewed with a “somewhat skeptical eye.”
While November’s jobs report is not a red alarm for the labor market, it does carry several signs of underlying weakness.
Wage growth slowed to 3.5% in November since the same time last year – its slowest pace since before the pandemic.
Initial claims for unemployment benefits and the layoff rate have not spiked, yet the number of Americans who have been out of work for more than six months rose to 1.9 million in November – up from 1.7 million the previous year.
The unemployment rate for young people aged 20 to 24 hit 8.3% in November, down from 9.2% in September – but it’s the highest rate since 2021.
Tuesday’s job report marks just the latest addition to a mixed bag of economic data, as inflation rose 3% in September – below expectations yet the fastest rate since the start of this year, according to the most recently available Consumer Price Index.
In a post on social media on Tuesday, the White House shrugged off the rising unemployment rate, writing: “THE BEST IS YET TO COME!”
National Economic Council Director Kevin Hassett argued the increase in the unemployment rate is because more people are looking for jobs than before.
“I think that, from the private sector point of view, it’s just about what we’ve been getting all year – it’s solid upward trajectory,” Hassett told CNBC.
American voters, meanwhile, have consistently ranked affordability as a top issue in exit polls, and consumer sentiment plunged in November to its lowest level in more than three years on economic concerns.
During an interview with Fox News’ “Mornings with Maria” on Tuesday, Treasury Secretary Scott Bessent assured Americans that 2026 will be a “bountiful” year as inflation drops, real wages rise and job growth and capital expenditures boom.
