In November, the US labor market exhibited an increased level of exclusivity. Unemployment reached a four-year peak of 4.6%, while the economy saw an addition of 64,000 jobs, according to the latest data. Last month’s job gains, which exceeded expectations, followed a loss of 105,000 jobs in October, according to a jobs report that stands out as one of the most unusual in recent history. The unprecedented duration of the federal shutdown significantly impacted the vital economic indicator. Statistical agencies experienced significant inactivity from October 1 to November 12, hindering their ability to collect, process, and analyze data. The BLS refrained from issuing a distinct jobs report for October, and for the first time in nearly 80 years, the unemployment rate for October was not released owing to insufficient data collection. Analysts anticipated a net increase of 40,000 jobs for November, with expectations that the unemployment rate would remain steady at the September level of 4.4%, as reported. November’s report, delayed from its original release date of December 5, provided a necessary update and included a selection of incomplete data from October gathered from various businesses and other organizations.
The monthly report on the labor market is derived from two comprehensive surveys: one targeting businesses and the other focusing on households. The establishment survey responses are predominantly submitted electronically, whereas the household surveys are primarily conducted in person and via telephone. However, the latter survey was not able to be conducted, resulting in the inability to gather labor force data and calculate the unemployment rate. Tuesday’s report contained extensive technical notes from the BLS regarding both the known and unknown impacts of the shutdown. In basic terms, the November household survey data necessitated additional back-end calculations, which may impact its reliability; conversely, the establishment data is likely more precise due to improved response rates during the extended collection timeframe. Reports indicated that the overall payroll figures for October and November are not influenced by the hundreds of thousands of furloughed federal employees, as the workers received their compensation in due course and were classified as employed.
However, the October employment tally arrived with inherent caveats, as the significant overall employment decline can be attributed solely to the reductions in the federal workforce implemented by the Trump administration several months prior. Earlier in the year, the administration’s Department of Government Efficiency initiative significantly reduced funding and employment across federal agencies, including “fork in the road” deferred resignations extended to employees set to take effect on September 30. Consequently, the employment data for October indicates that the federal government experienced a reduction of 162,000 jobs, a substantial one-time loss that significantly impacted the overall monthly figures negatively. Alongside the partial data for October, the report released on Tuesday also encompassed revisions for both September and August. September’s monthly gains were adjusted downward by 11,000 to a total of 108,000, while the job losses for August were revised to a deeper negative 26,000 compared to the previously reported negative 4,000. Amidst the surrounding clamor, Tuesday’s jobs report illustrated a scenario of a labor market that is, at best, stagnant.
As we approach the final month of the year, the US labor market is positioned to record its lowest level of job creation since the employment declines of 2020 and, prior to that, the Great Recession. “The US economy is in a jobs recession,” Heather Long, chief economist at Navy Federal Credit Union, stated in commentary issued Tuesday. In three of the last six months—June, August, and October—the economy has experienced a net loss of jobs, following a period exceeding four years without any monthly decline in employment. “The nation has added a mere 100,000 in the past six months,” Long wrote, noting that the majority of those positions were in health care, a sector that consistently seeks new employees owing to the aging demographic in the United States, while nearly all other sectors are stagnating or reducing their workforce. In November, health care and social assistance led employment growth with 64,000 jobs, while construction added 28,000 and manufacturing, transportation, and leisure and hospitality saw declines. According to Nicole Bachaud of ZipRecruiter, hiring has largely stalled due to uncertainty, while the slowdown in employment and rising unemployment have pushed the Federal Reserve to cut rates three times, though the effects have yet to materialize. Annual wage growth has fallen to 3.5%, the lowest in over four years, and labor market deterioration has been particularly pronounced among younger workers and minorities, with Black unemployment rising to 8.3%, the highest in four years, underscoring the uneven and increasingly fragile state of the US labor market.