U.S. Job Market Report: November Gains Offset October Losses Amid Federal Uncertainty

The U.S. government reported delayed employment figures showing that the country gained 64,000 jobs in November, following a loss of 105,000 jobs in October due to federal employee departures amid Trump administration cuts. The unemployment rate rose to 4.6%, the highest since 2021.

According to the Associated Press, official labor market reports for October and November were delayed by the 43-day federal government shutdown, which prevented the Department of Labor from releasing timely employment reports for September, October, and November.

The September jobs report was eventually released on November 20, seven weeks late, while some October data was included in the November report. However, the October unemployment rate could not be calculated during the shutdown.

Gains and Losses

November job gains exceeded economists’ expectations of 40,000, while October losses stemmed primarily from a 162,000 decrease in federal employees, many of whom resigned at the end of Fiscal Year 2025 on September 30 amid pressure from Elon Musk’s campaign to cut U.S. government salaries. Adjustments by the Department of Labor also removed 33,000 jobs from August and September payrolls.

Average hourly wages rose by only 0.1% compared to October, the smallest increase since August 2023. Year-over-year, wages increased 3.5%, the lowest rate since May 2021. Healthcare companies added more than 46,000 jobs in November, accounting for over two-thirds of private sector job growth, while construction added 28,000 jobs. Manufacturing, however, saw its seventh consecutive monthly decline, losing 5,000 jobs in November.

Employment Challenges

Hiring momentum has slowed due to uncertainty around Trump-era tariffs, lingering effects of the Federal Reserve’s high interest rates in 2022 and 2023, and businesses’ cautious approach to AI adoption. Companies largely retain current staff but hesitate to hire new employees, making job searches and interviews challenging. Federal Reserve policymakers remain divided over whether the labor market needs further support through rate cuts, complicated by delayed economic reports after the government shutdown.

Weak Job Market

Labor Department revisions for September revealed that the economy created 911,000 fewer jobs than initially reported over the year ending in March, averaging only 71,000 new jobs per month instead of 147,000. Job creation has further slowed to an average of 35,000 per month since March. Unemployment has risen from a 54-year low of 3.4% in April 2023 but remains modest by historical standards.

Thomas Feltmate, Chief Economist at TD Economics, commented: “The bottom line is that the labor market remains relatively weak. Employers show limited hiring intent, though they are also reluctant to lay off workers. Reduced labor demand compared to supply is driving the gradual rise in unemployment.”

Interest Rate Dilemma

Concerns about the labor market prompted the Federal Reserve to cut the benchmark interest rate by 0.25% last week, the third reduction this year. However, three Fed officials opposed the move, the highest dissent in six years, reflecting concerns over persistent inflation above the 2% target. The next Fed meeting is scheduled for January 27–28.