U.S. unemployment rate jumped to 4.6% in November, hitting its highest level in over four years. With two months of employment data released simultaneously due to the government shutdown, it’s become evident that the U.S. job market is cooling rapidly, with job losses occurring in three out of the last six months.
According to the employment report released by the U.S. Department of Labor on Tuesday, non-farm payroll jobs increased by 64,000 in November. This figure exceeded the Wall Street Journal’s (WSJ) market forecast of 45,000 jobs. However, October witnessed a decline of 105,000 jobs. The unemployment rate climbed to 4.6%, up 0.2 percentage points from September’s 4.4%.
This report combines two months of data due to the 43-day federal government shutdown that halted data collection. As a result, the October unemployment rate wasn’t calculated because the necessary surveys couldn’t be conducted during the shutdown.
Federal government job cuts dragged down overall figures. Federal employment decreased by 6,000 in November, following October’s sharp decline of 162,000 jobs. The Department of Labor reported a total reduction of 271,000 federal jobs since January this year.
This decline reflects U.S. President Donald Trump’s key policy initiative to shrink the federal workforce, which is only now being captured in the statistics. Workers on paid leave are still counted as employed, and many civil servants who chose early retirement or compensation packages received salaries until late September, delaying the reflection of actual job losses in the data.
Previous employment figures also underwent significant downward revisions. September’s new job count was revised from 119,000 to 108,000, while August’s figure changed from a 4,000 job loss to a 26,000 job loss. With employment declines in June, August, and October, the U.S. economy has seen job losses in half of the past six months.
Experts characterize the current labor market as being in a “low-fire, low-hire” phase. While mass layoffs aren’t occurring, companies have become extremely cautious about new hires. This hiring restraint is attributed to concerns over reignited inflation, tariff uncertainties, and the belief that artificial intelligence (AI) could replace many jobs. An increasing number of companies are even delaying seasonal hiring for temporary positions as the year-end peak season approaches.
These figures represent crucial data for the Federal Reserve to consider ahead of its next Federal Open Market Committee (FOMC) meeting in late January. The Fed cited the labor market slowdown as a key factor in its recent interest rate cut.
However, Fed Chair Jerome Powell cautioned that data collection was incomplete for parts of October and November, indicating he would view future data with some skepticism. Powell also warned that official statistics might overestimate monthly job gains by up to 60,000, suggesting the U.S. could have been losing an average of 20,000 jobs monthly since April.
