Jobs growth surprises in November, yet warning signs emerge for US labour market
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US job growth beat forecasts in November after shutdown losses, but unemployment hit a four-year high as the Fed warned data may overstate hiring
The US labour market showed a stronger-than-expected rebound in November, clawing back part of the losses caused by the prolonged federal government shutdown, official figures revealed on Tuesday (December 16). Payrolls shrank by around 105,000 jobs in October, while November saw an addition of 64,000 jobs. The recovery exceeded most economist estimates, which had projected job growth of roughly 40,000. Despite this improvement, unemployment continued its upward trend, rising to 4.6%, the highest level in four years.
The employment report, normally published on a fixed monthly schedule, was delayed after the 43-day government shutdown disrupted data collection. Its release comes at a time when questions are growing about the overall health of the US economy and the reliability of federal economic statistics. Concerns over data accuracy have intensified after the Bureau of Labor Statistics (BLS) confirmed that complete October employment figures would never be published, while November’s data was delayed and partially affected by the shutdown. Federal Reserve Chair Jerome Powell recently advised policymakers and analysts to treat figures with caution as data gaps continue to distort the numbers.
Additional indicators suggest underlying weakness in the labour market. Payroll processor ADP reported that private employers cut approximately 32,000 jobs in November, reversing gains of 47,000 recorded in October. Earlier data has also pointed to softening conditions. The September jobs report, released weeks late due to the shutdown, showed job creation of 119,000, beating forecasts, but the unemployment rate rose to 4.4%, its highest reading since 2021.
Powell has warned that official employment figures may be overstating job growth, noting that immigration restrictions under President Donald Trump have reduced labor supply. According to Powell, this has masked deterioration in employment conditions and kept unemployment figures from rising more sharply. His remarks followed the Federal Reserve’s decision to cut interest rates by 25 basis points, a move framed as a precautionary response to mounting risks in the labour market. “Labor supply has dropped significantly,” Powell said, adding that payroll data may currently be overstating job gains by as much as 60,000 per month. He suggested that modest reported growth could actually represent net job losses once revisions are made.
