Newly released government data reveals a significant cooling in the United States labour market, with the unemployment rate climbing to its highest point in over four years. The delayed report underscores growing economic pressures in the world's largest economy.
Key Figures Show a Cooling Jobs Market
The US unemployment rate increased to 4.6 percent in November, up from 4.4 percent in September, according to figures from the Labor Department. This marks the highest jobless rate recorded since September 2021. Notably, no official rate was published for October due to a lengthy government shutdown that prevented data collection, which lasted until November 12.
The report, published on Tuesday, also contained revised data for the previous month, showing that the American economy shed 105,000 jobs in October. A major contributor to this loss was a sharp decline of 162,000 government jobs, as federal employees who accepted deferred resignation offers left the payrolls.
While hiring resumed in November with a gain of 64,000 positions, the pace of job creation has slowed compared to earlier periods. Employment increases were primarily seen in the health care and construction sectors, while federal government employment continued to contract.
Economic Implications and Political Reactions
These labour market figures are being closely watched for their potential impact on US monetary policy. The Federal Reserve has already cut interest rates three consecutive times this year in response to weakening employment but has indicated that further cuts may require stronger justification. A rapidly deteriorating jobs situation could pressure the central bank to act more aggressively to stimulate economic activity.
The data has ignited political debate. Elizabeth Warren, the leading Democrat on the Senate Banking Committee, criticised former President Donald Trump's economic policies, stating that "chaotic tariffs" were "hammering the labour market." She highlighted that with wages struggling to keep pace with rising costs, Americans are feeling increasingly anxious about the economy.
In contrast, Trump's chief economic adviser, Kevin Hassett, offered a different perspective on the government job losses. He suggested that federal workers who took buyouts were remaining in the labour force and actively seeking new employment, expressing confidence they would find it.
Broader Signs of an Economic Slowdown
Additional economic indicators released alongside the jobs report point to a broader cooldown. Average hourly earnings saw a minimal increase of just 0.1 percent in November to $36.86, with annual wage growth slowing to 3.5 percent. Both figures represent a deceleration from previous months.
Furthermore, a separate Commerce Department report showed that retail sales were flat in October, holding at $732.6 billion. This stagnation followed declines in spending at motor vehicle dealers, gasoline stations, and restaurants.
Economist Heather Long of the Navy Federal Credit Union summarised the sentiment, stating, "Americans are feeling squeezed," and noting a consumer shift towards spending on necessities. On employment, she declared, "The US economy is in a jobs recession," pointing out that the nation has added a mere 100,000 jobs over the past six months.
Despite the softness, some analysts believe the situation may not be dire enough to prompt immediate Federal Reserve action. Nationwide chief economist Kathy Bostjancic observed that while hiring remains soft, it is "not softening further" and is moderately firmer than weak summer readings, suggesting the Fed may hold rates steady for the coming months.
