Delayed Jobs Report Shows Softening Labor Market, Rise in Unemployment

U.S. employers reported adding 64,000 jobs in November and the unemployment rate rose to 4.6%, the highest point in more than four years, according to the latest employment report from the U.S. Bureau of Labor Statistics (BLS), released Dec. 16.

The report combined data from October and November due to the disruption caused by the 43-day federal government shutdown which began Oct. 1. The delayed report offers the latest snapshot of the U.S. economy, marked by an ongoing hiring slowdown and an uptick in inflation.

“Today’s incomplete and unconventional jobs report may always need an asterisk attached to it, but it still paints a sobering picture of a job market that may officially be turning frigid after a prolonged cooling period,” said Laura Ullrich, director of economic research at the Indeed Hiring Lab. “The combined two-month report shows notable declines in employment in October as tens of thousands of government employees who had remained on payrolls through the summer finally came off as their buyout deals took effect.”

The private sector added 52,000 jobs in October, but 162,000 federal government jobs were officially counted as lost as the Trump administration’s deferred resignation program deadline came due Oct. 1.

Jobs numbers for October and November reaffirm a gradual deceleration in labor market activity, said Noah Yosif, chief economist and head of research at the American Staffing Association. “After years of decay from rising labor costs and economic uncertainty, the labor market remains on edge because employers cannot muster the necessary confidence to add more headcount just yet,” he said.

“Uncertainty around tariffs and geopolitical tensions is blocking interest rate cuts from being able to move through the economy to loosen business decisions,” said Nicole Bachaud, labor economist at ZipRecruiter. “As a result, hiring remains subdued and stagnation remains the dominant storyline in today’s labor market.”

While the BLS report is somewhat muddled this month, a variety of other labor market data has been released in recent weeks, including:

• ADP’s monthly private-sector employment reports estimating a net gain of 47,000 jobs for October and a net loss of 32,000 jobs for November.
• A separate BLS report showing job openings increased in October, hiring has stalled, and layoffs have increased.
• Weekly unemployment claims remaining steady.

The latest BLS report offers new ways to read a job market that has cooled significantly in recent months. Payrolls for August were revised down by 22,000, from -4,000 to -26,000, and the change for September was revised down by 11,000, from 119,000 to 108,000.

Through that lens, the employment figures for the last three months are an improvement. Glassdoor Chief Economist Dainel Zhao pointed out that private payroll growth has averaged 105,000 jobs a month from September through November, a substantial improvement from the sluggish summer months of June through August where just 13,000 jobs per month were added on average.

“The job market is holding up, but it’s shaped like a dumbbell, with concentrated strength in health care, and concentrated weakness in government,” said Andrew Flowers, chief economist at Appcast.

The federal job losses are real, but they mask the underlying trend, he said. “It seems like the job market — abstracting from the one-off DOGE [Department of Government Efficiency] effects — is doing OK.”

Amy Glaser, senior vice president at Adecco sees the latest employment report as “a testament to the resilience of the U.S. labor market, even as conditions continue to adjust.”

While the unemployment rate ticked up, job growth hasn’t come to a standstill, particularly in sectors like health care, where demand remains strong, she said.

“What we’re seeing is a more intentional, measured approach to hiring, and as we head into 2026, we expect that trend to continue, with employers prioritizing quality over quantity and flexibly scaling based on their needs,” Glaser said.

Ger Doyle, regional president for North America at ManpowerGroup agreed that hiring strategies have become increasingly selective.

“Our real-time labor market data shows hiring demand continued to cool in November, with open and new job postings down 7% year-over-year,” he said. “Companies are prioritizing roles that deliver immediate business impact, focusing on critical functions tied to revenue, operations, and technology while delaying discretionary positions. On the worker side, mobility continues to slow as quits are at their lowest level since June 2020, a clear indication that employees are opting for stability amid economic uncertainty.”

Overall, economists describe the labor market as a low-fire, low-hire environment. Employers that typically rush to hire seasonal workers at this time of year are sitting tight, while others are experimenting to see how many job tasks can be done by AI.

Doyle forecasts employers maintaining lean teams while planning cautiously for 2026, but recent interest rate cuts could revive sentiment and potentially shift priorities from workforce maintenance to strategic growth investment, he added.

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Industry Breakdown

Health care employment grew by 46,000 jobs, in line with the average monthly gain of 39,000 over the prior 12 months.

“Construction also showed resilience, adding 28,000 jobs, as skilled trades continue to show strong signs of demand,” Bachaud said. “However, key consumer-facing sectors saw contraction. Leisure and hospitality and transportation and warehousing reported negative job growth, reflecting how escalating price pressures — largely driven by tariffs — continue to restrict consumer spending and business expansion.”

Ullrich said that it is difficult to not attribute at least some of the weakness in manufacturing job growth to tariff policy, and the uncertainty surrounding it.

“Manufacturing sub-sectors including machinery manufacturing, electronics manufacturing, and transportation equipment manufacturing have each lost more than 10,000 jobs in the last year and are all relatively exposed to tariffs on both their final goods and the intermediate goods used in production,” she said.

Economists have pointed out that an alarming share of the country’s job growth in 2025 has been in one sector: health care. “Certain health care roles now account for virtually all of this year’s job growth, a worrisome concentration that is helping to push up unemployment overall as non-healthcare workers struggle to enter the market,” Ullrich said.

 Sidelined workers are showing signs of turning to temporary or gig work to get by, she added. “The share of workers with multiple jobs has risen to 5.8%, the highest level in more than 25 years, representing almost 9.5 million workers.”

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Unemployment Jumps

The unemployment rate rose to 4.6% from 4.4% in September and is at its highest level since September 2021.

“The unemployment rate itself isn’t yet flashing a recession warning, but the steady rise is concerning as continued increases put it on track to cross that threshold,” Zhao said. “The share of workers employed part time for economic reasons also rose, driving broader measures of labor underutilization like the U-6 unemployment rate higher, rising to 8.7% in November, a sharp increase from 8% in September.”

The total number of unemployed individuals has increased by over 700,000 in the past year, Bachaud said. “Crucially, the rise in re-entrants — those returning to the labor force — is outpacing all other categories of the unemployed,” she said. “This demographic trend is a positive counter-signal against structural headwinds, suggesting a potential rebalancing of the labor force as more working-age individuals seek employment.”

A big challenge remains hiring the long-term unemployed. “The number of individuals unemployed for 27 weeks or more has risen by 15.5% over the past year,” Bachaud said. “This increase signifies that for a growing segment of the population, unemployment is transforming from a temporary, transitory state into a protracted state of being. Some workers are leaving the labor force entirely, with the numbers of marginally attached and discouraged workers rising over the last year.”

It Could Be Worse

The BLS has cautioned that some of its data will be affected for several months by impacts of the government shutdown. Others have called the agency’s data collection methods into question, raising fears that recent job creation numbers could be overstated.

“In a best-case world, the labor market continues its languid growth, with a small set of sectors generating a very large percentage of jobs,” Ullrich said. “However, it is also possible that we have lost jobs in many of the months this year, and future revisions will present an even bleaker view.”