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The U.S. job market showed clear signs of strain this fall, shedding jobs in October and posting only modest gains in November as unemployment climbed to its highest level in more than three years, according to government data released Tuesday after weeks of delay caused by a federal shutdown.
The economy lost 105,000 jobs in October and added just 64,000 jobs in November, the Labor Department said, lifting a monthslong fog that had obscured the labor market. The unemployment rate rose to 4.6% in November, its highest level since September 2021.
The data confirm that hiring has slowed sharply after years of post-pandemic resilience, with multiple months of job losses and weak gains raising concerns about the economy’s momentum heading into the end of the year.
Revisions and government job cuts weigh on totals
The national employment picture was already fragile before Tuesday’s report. Jobs reports in June and August showed net job losses, the first time since 2020 that two months of contraction occurred in the same year prior to November.
September offered only limited relief, with job growth of 119,000 and little change in unemployment at 4.4%.
Tuesday’s report also included downward revisions to recent data. The Labor Department said employment in August and September combined was revised down by 33,000 jobs, further weakening the overall picture.
A sharp decline in federal employment played a central role in October’s losses.
Federal government payrolls fell by 162,000 jobs in October, as employees who accepted a deferred resignation offer were removed from payrolls, the Bureau of Labor Statistics said. The program was implemented earlier this year under the now-defunct Department of Government Efficiency, an initiative championed by Elon Musk.
Since January, federal government employment has dropped by 271,000 jobs.
Wage growth sluggish as consumer spending softens
Wage growth also showed signs of cooling. Average hourly earnings rose just 0.1% in November and were up 3.5% over the past year — barely outpacing inflation’s most recent reading in September.
That limited wage growth has translated into muted consumer spending.
Retail and food services sales totaled $732.6 billion in October, a slight dip from September, the Census Bureau reported Tuesday. Sales were up 3.5% compared with October 2024, but growth slowed from earlier in the year.
Excluding autos and food, retail sales rose slightly to $633.2 billion, suggesting consumers remain cautious about discretionary spending.
Sector-by-sector: health care and construction stand out
Despite the overall slowdown, some sectors continued to add jobs.
In November, health care employment rose by 46,000, while construction payrolls increased by 28,000. The Labor Department said 19,000 of those construction jobs were in nonresidential specialty trade contracting, potentially reflecting investment in large-scale projects such as data centers.
Other sectors struggled.
Employment fell in transportation and warehousing, including a loss of more than 18,000 courier and messenger jobs. The leisure and hospitality sector shed 12,000 jobs, a development economists view as a warning sign for consumer demand.
ADP chief economist Nela Richardson warned earlier this month that weakness in leisure and hospitality was “the most concerning trend.”
“That points swiftly back to the consumer and how healthy and resilient the consumer will be,” she said.
Manufacturing, retail trade, information and financial services showed little net growth.
Data gaps and outlook
Because of the 43-day government shutdown, which ended Nov. 12, the October report lacks several details, including an unemployment rate and labor force participation data. Some demographic breakdowns for that month will not be released.
The next major economic data point arrives Thursday, when the Labor Department is scheduled to publish inflation figures that were also delayed by the shutdown.
Financial markets reacted calmly to Tuesday’s report, with stock futures trading mostly flat. Federal Reserve Chair Jerome Powell had previously cautioned that the delayed employment data could be “distorted” and emphasized that policymakers would look at broader trends.
Still, with unemployment rising, wage growth slowing and hiring sputtering, the new figures suggest the labor market — long a pillar of economic strength — is losing altitude.
