Unemployment Rate Hits a 4-Year High
U.S. employers added a better-than-expected 64,000 jobs in November, the Department of Labor announced Tuesday, but the gain followed a loss of 105,000 jobs in October. The net loss over the two-month period helped push the unemployment rate to a four-year high of 4.6%, up two-tenths of a percentage point from the previous reading in September.
The release of incomplete October data, which was included in the November report, was delayed by the 43-day government shutdown. Federal officials say they do not plan to provide a comprehensive report for the month, leaving a partial hole in the unemployment data for the first time in more than 70 years.
Based on the data we do have, the October job loss was driven by the Trump administration’s aggressive campaign to reduce the size of the federal workforce, the effects of which finally hit the employment numbers at the end of the fiscal year. Federal employment shrank by 162,000 in October, a trend that continued at a more modest level in November, with 6,000 federal jobs lost. Federal employment is down by 271,000 from its peak in January.
Overall, the November report adds another piece of evidence backing the suspicion that job growth has been anemic since April, when President Trump unveiled his new tariffs on trading partners around the world. Three of the past six months have seen net job losses. Incorporating revisions that knocked 33,000 jobs off the August and September payroll numbers, average monthly job growth has averaged just 17,000 per month over the past eight months, with much of the growth occurring in just one sector, healthcare. Manufacturing continues to struggle, with employment in the sector shrinking over the past year.
As University of Michigan economist Justin Wolfers noted, the numbers could be even worse. Federal Reserve Chair Jerome Powell said last week that Fed officials believe federal data are currently overreporting jobs growth by about 60,000 per month, raising the possibility that the labor market has actually been shrinking in recent months.
White House celebrates: The White House said Tuesday that the November jobs report shows that Trump is “fixing the damage caused by Joe Biden,” an effort that includes firing tens of thousands of federal workers.
The White House also claimed that only “native-born Americans” are getting jobs in the private sector — “NOT illegals.” However, some economists have questioned the basis of such claims, including Jed Kolko of the Peterson Institute for International Economics, who has warned that the numbers the administration is relying on amount to “a multiple-count data felony” due to the limitations of the data involved.
The White House highlighted wage growth, too, saying real wages are on track to grow 4.2% in Trump’s first year in office. Growth was weak in October, though, and appears to be decelerating, with average hourly earnings rising just 0.1% in October, the smallest increase since August 2023.
What it all means: The November jobs report suggests that the labor market is still a low-fire, low-hire environment, with most of the data remaining on trend. Layoffs aren’t rising, but at the same time, hiring is weak.
The mixed picture may provide some reassurance for workers worried about the state of the economy, but it also highlights persistent softness that spells trouble for those who have lost their jobs or are looking for something new.
Many economists believe that the weakness is directly linked to the Trump administration’s policies, especially the historic tariff hikes and the aggressive effort to reduce the number of foreign workers.
“All roads lead back to policy out of Washington, D.C.,” said Joseph Brusuelas, chief economist at RSM, per The Wall Street Journal. “I’m not saying this is a harbinger of a recession, but we have some real challenges to the economy that we didn’t have one year ago.”
Thomas Feltmate, senior economist at TD Economics, said in a note that “labor demand has cooled more than supply in recent months, which is what’s behind the steady upward drift in the unemployment rate.”
That increasing unemployment rate could be a sign of things to come. Laura Ullrich, director of economic research for the Indeed Hiring Lab, said in a note that the latest report “paints a sobering picture of a job market that may officially be turning frigid after a prolonged cooling period.”
However, as Ullrich and other analysts noted, it’s too soon to draw any conclusions given the delayed and incomplete nature of the latest data. Economists are hoping the December report will provide a better picture of where the labor market is headed as we enter the new year.
