Key Points
- Nonfarm payrolls rose by a seasonally adjusted 64,000 in November, topping the Dow Jones estimate of 45,000 and rebounding from a sharp 105,000 decline in October.
- The unemployment rate climbed to 4.6%, higher than expected and the highest level since September 2021. A broader unemployment measure jumped to 8.7%.
- Health care once again did the heavy lifting, adding REUTERS/Brian Snyder/File Photo
FILE PHOTO: A “Help Wanted” sign hangs in a restaurant window in Medford, Massachusetts, U.S., January 25, 2023.
Brian Snyder | Reuters
Nonfarm payrolls rose slightly more than expected in November, while October’s numbers showed a steep drop, and the unemployment rate climbed to its highest level in four years, according to Bureau of Labor Statistics data released Tuesday after delays caused by the government shutdown.
Job growth came in at a seasonally adjusted 64,000 for the month, beating the Dow Jones forecast of 45,000 and marking an improvement from October’s sharp decline.
The unemployment rate increased to 4.6%, above expectations and the highest reading since September 2021. A broader measure that includes discouraged workers and those working part-time for economic reasons rose to 8.7%, the highest level since August 2021.
Unemployment Climbs to Post-2021 Highs
Both headline and broader measures now point to rising slack across the U.S. labor market.
Headline unemployment
The jobless rate rose above expectations, reaching its highest level since September 2021 — a clear sign of cooling hiring conditions.
Broader labor underutilization
A wider unemployment measure that includes discouraged workers and involuntary part-time employment climbed to its highest level since August 2021.
Why this matters
Rising broader unemployment often signals underlying labor market stress before it fully appears in payroll growth or headline job losses.
Alongside the November figures, the BLS released a partial report for October showing payrolls fell by 105,000. While there was no formal consensus forecast, economists had widely expected a pullback after September’s surprise gain of 108,000.
October’s drop was driven largely by a sharp decline in government employment, as delayed layoffs announced earlier in the year finally took effect. Government payrolls fell by 162,000 in October and slipped another 6,000 in November.
The October decline marked the third time in six months that payrolls turned negative. The BLS also revised August job losses deeper, cutting payrolls by an additional 22,000 to show a net loss of 26,000. September’s initial estimate was revised down by 11,000.
The agency warned that the household survey used to calculate the unemployment rate could be affected for several months due to disruptions from the shutdown. Data collection challenges in October led to the cancellation of both the jobs report and the closely watched Consumer Price Index release.
Despite these issues, the overall picture of the labor market remained largely unchanged.
Hiring and firing both remain subdued, with job growth also weighed down by tighter border policies under President Donald Trump, which have reduced the usual flow of immigrant workers into the labor force.
Industry data showed that most of November’s job gains came from health care, which added 46,000 positions — more than 70% of total growth. Construction added 28,000 jobs, while social assistance rose by 18,000.
On the downside, transportation and warehousing lost 18,000 jobs, continuing a longer-term slide in the sector. Leisure and hospitality employment also fell by 12,000.
November Hiring Was Narrow — Health Care Did the Heavy Lifting
Job growth was highly concentrated, with service sectors carrying gains while key industries continued to contract.
Job Gainers
Health care added more than 70% of total November job growth, underscoring its dominance as the primary hiring engine.
Construction hiring remained resilient, despite elevated borrowing costs and slower economic momentum.
Social assistance employment continued to expand, reflecting steady demand for care-related services.
Job Losers
Employment declined further as the sector extended a longer-term slide tied to weakening goods demand.
Leisure and hospitality payrolls fell, signaling cooling momentum after a strong post-pandemic recovery.
“The U.S. economy is in a jobs recession,” said Heather Long, chief economist at Navy Federal Credit Union. “The nation has added a mere 100,000 jobs over the past six months, and most of them came from health care — an industry that’s almost always hiring because of America’s aging population.”
For policymakers, the Federal Reserve is walking a fine line — trying to prevent further labor market weakening without reigniting stubbornly high inflation.
At its most recent meeting, the Fed cut interest rates by a quarter percentage point but signaled that additional cuts will require clearer evidence of economic softening. The central bank has now delivered three straight rate reductions since September, bringing its benchmark rate to a target range of 3.5% to 3.75%.
“The Fed is unlikely to put much weight on today’s report given the data disruptions,” said Kay Haigh, global co-head of fixed income and liquidity solutions at Goldman Sachs Asset Management. “The December employment report, released in early January ahead of the next meeting, will be a far more important signal for near-term policy decisions.”
Financial markets continue to price in low odds of another rate cut in January. Following the report, the probability stood at about 24.4%, unchanged from Monday, according to CME Group’s FedWatch tool.
Ukraine Signals It Could Drop NATO Bid in Shock Peace Offer to End War
Fed officials have long argued that the labor market is not fueling inflation, and Tuesday’s report supported that view.
Average hourly earnings rose just 0.1% in November, below the 0.3% estimate, and were up 3.5% from a year earlier — the smallest annual gain since May 2021.
The uptick in unemployment largely reflected an expanding labor force rather than widespread job losses.
Over the past two months, household employment increased by 407,000. That gain was partially offset by a 323,000 increase in the labor force, pushing the participation rate slightly higher to 62.5%.
In other economic news on Tuesday, the Commerce Department reported that retail sales were flat in September, missing expectations for a 0.1% increase. Excluding auto sales, however, retail spending rose 0.4%, topping the 0.2% forecast.
