Nonfarm payrolls showed a modest increase in November, according to the Bureau of Labor Statistics, which released the data Tuesday after a delay due to the government shutdown. The report indicated that job growth reached 64,000 for the month, surpassing the Dow Jones estimate of 45,000 jobs added.
Conversely, the unemployment rate rose to 4.6%, exceeding expectations as well. In addition to the November figures, the BLS provided a revised October count that revealed a downturn of 105,000 jobs, which many economists predicted following an unexpected spike of 108,000 in September.
The decline in October was largely driven by a significant reduction in government employment, as earlier layoffs were implemented. The government sector alone saw a reduction of 162,000 jobs in October, with another decrease of 6,000 reported for November.
This October decline marks the third instance of a net negative payroll change in the last six months. Furthermore, the BLS revised August’s job figures downward by 22,000, now reporting a total loss of 26,000 for that month, while September’s figures were also adjusted down by 11,000.
The household survey, which determines the unemployment rate, is expected to reflect challenges stemming from the recent shutdown for several months. The issues encountered in capturing the October data led to the cancellation of both the jobs report and the much-anticipated consumer price index.
Despite the mixed signals, the report represents a consistent trend in the labor market characterized by low hiring rates alongside minimal layoffs. This situation has been compounded by strict immigration policies under the Trump administration, which have significantly reduced the usual inflow of workers.
From a monetary policy perspective, the Federal Reserve faces the challenge of balancing efforts to prevent further labor market weakening while also mitigating persistent inflation. At its latest meeting, the Fed reduced its key interest rate by a quarter percentage point, though officials indicated that further cuts may be less likely, with three consecutive reductions since September pushing the benchmark rates down to a range of 3.5% to 3.75%.
Fed officials have consistently argued that the labor market does not contribute to inflation, an assertion reinforced by Tuesday’s jobs report. Average hourly earnings rose by only 0.1% for the month, falling short of the expected 0.3% increase, and annual earnings rose by 3.5%, the slowest growth rate since May 2021.
This evolving landscape reflects a labor market grappling with significant challenges but also hints at resilience in the face of potential economic headwinds.