The labor market is cooling, even after accounting for the noise
In the waning weeks of 2025, the American labor market offered a quieter, more troubled accounting of itself — 64,000 jobs added in November, unemployment at its highest point in four years, and a Federal Reserve left to make consequential decisions in a fog of incomplete data. The government shutdown that preceded these numbers had distorted the very instruments used to measure them, leaving economists and policymakers alike to reason carefully about a reality they could not quite see. It is a familiar human predicament: being asked to navigate the future with maps drawn under duress.
- Job growth collapsed to 64,000 in November — far below expectations — while October's figures were revised to show a loss of 105,000 positions, revealing a labor market in sharper retreat than previously understood.
- Unemployment has climbed from 4% at the year's start to 4.6%, a four-year high, as federal workforce departures accelerate and private-sector hiring stalls across five of the last seven months.
- A government shutdown corrupted the data collection process itself, forcing the Bureau of Labor Statistics to widen its analysis window and issue numbers carrying higher-than-usual margins of error — the fog is built into the figures.
- Fed Chair Powell compounded the uncertainty by warning that payroll counts may be inflated by roughly 60,000 jobs per month, meaning the already-weak November number could in reality be negative.
- The Federal Reserve, having already cut rates three times, now faces its January policy meeting with a distorted jobs picture, a pending inflation report, and a forecast that anticipated only one modest cut in all of 2026 — a forecast made before this data arrived.
The jobs report that landed in mid-December told a story of a labor market losing its footing. American employers added just 64,000 positions in November — well below what economists had anticipated — while October was revised to show a loss of 105,000 jobs, a figure delayed by the government shutdown that had closed federal offices during the data collection window. Unemployment rose to 4.6%, its highest level since September 2021, up from 4% at the start of the year.
The shutdown left its mark on the data itself. Survey response rates fell, the Bureau of Labor Statistics was forced to use a two-month analysis window, and the resulting estimates carried what the agency described as slightly higher than usual standard errors. Economists found themselves reading incomplete numbers and trying to discern the true shape of the labor market beneath the noise.
The sector-level details offered little comfort. Healthcare added 46,000 jobs and construction gained 28,000, but transportation and warehousing shed 18,000 positions. Federal employment fell by another 6,000 in November, continuing a broader contraction — since January, the federal workforce had shrunk by 271,000. Over the past seven months, five had seen net private-sector job losses. The narrow concentration of job creation in recent years — government, healthcare, and leisure — was now narrowing further as government became a drag.
The Federal Reserve had cut its benchmark rate three times before this report arrived, but Chair Jerome Powell introduced a complication of his own: the Labor Department, he suggested, may be overcounting payroll jobs by roughly 60,000 each month. That caveat transformed an already-weak 64,000 figure into something potentially worse. Economists remained divided on whether the Fed would press forward with further cuts or pause to let existing policy take hold. The December inflation report and the January jobs figures were still to come, and the Fed's next policy meeting loomed at the end of January — with the true state of the labor market still somewhere in the fog.
The numbers arrived on a Tuesday in mid-December, and they told a story of a labor market losing momentum. American employers added just 64,000 jobs in November, a sharp deceleration from what economists had been expecting. The month before had been worse—October saw employers cut 105,000 positions, a figure that emerged only after the government shutdown had finally cleared enough for the Labor Department to release its data. The unemployment rate, meanwhile, climbed to 4.6%, the highest it had been since September 2021. At the start of the year, it had sat at 4%.
The shutdown itself had muddied the picture. Because federal offices were closed during the data collection period, the November estimates carried what the Bureau of Labor Statistics called "slightly higher than usual standard errors." Survey response rates had dropped. The agency had to rely on a two-month analysis window instead of the standard one. Economists were left squinting at numbers they knew were incomplete, trying to read the true state of hiring beneath the noise. Mark Hamrick, a senior analyst at Bankrate, captured the mood: the good news was finally having federal data again after months of disruption. The bad news was what that data showed.
When the Labor Department dug into the details, the picture grew more complicated. Payroll gains for August and September were revised downward by a combined 33,000 jobs, suggesting the labor market had been weaker in late summer and early fall than first reported. The October job loss had been driven largely by federal government workers—162,000 of them—who had accepted deferred resignation offers and left the payroll. Another 6,000 federal positions disappeared in November as those departures continued. Since January, federal employment had fallen by 271,000 overall.
Some sectors were still hiring. Healthcare, which had been a reliable engine of job creation for years, added 46,000 positions in November. Construction gained 28,000 jobs. Social assistance picked up 18,000. But transportation and warehousing shed 18,000, with couriers and messengers bearing the brunt of the cuts. Across the broader economy, the picture was one of stagnation. Over the past seven months, five had seen net job losses in the private sector. One economist noted that over the past three years, more than 90 percent of all jobs created in the United States had come from just three sectors—government, private education and healthcare, and leisure and hospitality. Now government was becoming a drag.
The Federal Reserve had already begun responding to the cooling labor market. On December 10, three days before this jobs report arrived, the central bank had cut its benchmark interest rate for the third consecutive time. Fed Chair Jerome Powell, however, had issued a warning that complicated the picture further. The Labor Department, he suggested, might be overcounting payroll jobs by about 60,000 each month. Those numbers would eventually be corrected downward. "So 40,000 jobs could be negative 20," Powell said, acknowledging the uncertainty. That caveat hung over everything—the 64,000 figure might be overstated, the October loss might be worse than reported, and the true state of the labor market remained obscured.
Economists were divided on what came next. Some believed the cooling job market would push the Federal Reserve toward further rate cuts. Others thought policymakers might pause, giving the three cuts already made time to work through the economy. The Fed's December forecast showed officials expected only one quarter-point cut in all of 2026, a signal of restraint. But that forecast had been made before this jobs report landed. The December inflation report was still due on December 18. The January jobs report would arrive on January 9. The Fed's next policy meeting was scheduled for the end of January. Between now and then, a clearer picture of the labor market might finally emerge—or the fog might deepen further.
Citas Notables
The good news is that we finally get federal data on the job market after the logjam caused by the government shutdown. The not-so-good news is that it isn't pretty.— Mark Hamrick, Bankrate Senior Economic Analyst
There's little doubt the labor market is cooling, even after accounting for these nuances in the October and November data.— Elizabeth Renter, NerdWallet Senior Economist
La Conversación del Hearth Otra perspectiva de la historia
What does 64,000 jobs in a month actually mean for someone looking for work right now?
It means the job market has tightened considerably. For context, the economy needs to add roughly 100,000 to 150,000 jobs monthly just to keep pace with population growth. At 64,000, you're well below that. If you're job hunting, there are fewer openings, more competition, and employers are being more selective.
The unemployment rate went up even though jobs were added. How does that happen?
The unemployment rate measures the share of people actively looking for work who can't find it. When hiring slows, some people stop looking—they drop out of the labor force. But others keep searching. If more people enter the job market than find jobs, the rate rises. It's a sign that confidence in finding work is eroding.
Why does the government shutdown matter so much for these numbers?
The shutdown disrupted data collection for two months. The Labor Department couldn't survey businesses normally. So when they finally released October and November figures, they had lower response rates and had to use statistical adjustments. The Fed Chair even warned the numbers might be overstated by 60,000 jobs per month. You're essentially reading a blurry photograph of the labor market.
Healthcare added 46,000 jobs. Why is that sector so resilient?
Aging population, chronic disease management, ongoing demand for care workers—those are structural forces that don't disappear in a downturn. But it also masks a deeper problem: most other sectors are struggling. When 90 percent of job creation over three years comes from just three sectors, that's not a healthy, diversified economy.
What's the Federal Reserve actually trying to do by cutting rates?
They're trying to make borrowing cheaper to stimulate hiring and spending. But they're also signaling they're worried about the labor market cooling too fast. Three cuts in a row is significant. At the same time, Powell's warning about overcounting suggests they don't fully trust their own data—which is unsettling.
If the Fed keeps cutting rates, won't that eventually create jobs?
In theory, yes. But there's a lag. Rate cuts take months to ripple through the economy. And if the underlying problem is that businesses have lost confidence in demand, cheaper borrowing alone won't fix it. They'll just sit on the cash.