Unemployment rose modestly last month while payroll growth was limited
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The jobs report from the Bureau of Labor Statistics (BLS) for November 2025 was finally released this morning, after a delay induced by the federal government shutdown. The report offers some anxiously awaited information on the job market – but probably not as much clarity as the Federal Reserve hoped it would get.
The BLS did not field a household survey in October, so the November results must be compared with those of September, making the numbers a bit less comparable to the usual monthly changes. The payroll survey for November can be compared with October, since employers kept and reported numbers for each month.
What do the numbers show? On the household side, the unemployment rate ticked up to 4.6 percent (from 4.4 in September). The number of people employed actually bumped up by about 96,000, but this was not enough to absorb a labor force that grew by over 300,000. While most of the underlying categories of unemployment changed little, the number of workers employed part-time for economic reasons rose by over 900,000, indicating that there were too few full-time jobs available for those who sought them.
On the payroll side, employers reported just 64,000 new jobs since October. This modest growth is largely consistent with what we have seen during most previous months in 2025; monthly payroll growth from January to September averaged 67,500, very close to this month’s total gain. The only sectors reporting significant payroll growth were health care (up 46,000), social assistance (up 18,000), professional services (up 12,000) and construction (up 28,000). All other sectors were flat or declining. For instance, payrolls in leisure and hospitality dropped by 12,000, those in manufacturing by 5,000, and those in transportation and warehousing by 18,000, while others (like mining, wholesale or retail trade, and information) showed little or no gain.
The largest drop in payrolls actually appear during the month of October, when employment dropped by over 100,000. But the latter change was driven entirely by federal government employment, which dropped by a whopping 162,000. Many workers who had earlier left their jobs were receiving buyouts for several months and had been counted as working until September, when most buyouts ended. Overall federal employment is now down by over 270,000 since the beginning of the year.
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Finally, the previously reported payroll numbers for August and September were revised downward by 22,000 and 10,000 respectively, indicating greater weakness during those months than what we saw in preliminary survey data.
What is the broad takeaway from this report? Overall, the labor market continues to look fairly weak, though not much more than what we observed in earlier months. The uptick in unemployment is driven by a growing workforce, not by more joblessness; but the rise in the number of part-time workers who would have preferred full-time employment is noteworthy. On the payroll side, except for the large drop in federal employment, we see a job market that is mostly flat outside of a few sectors, like health care and construction. This looks a lot like what we saw for much of 2025.
Interestingly, there has been an uptick in job vacancies reported by BLS in September and October, with the vacancy rate rising from 4.3 to 4.6 percent. This suggests employers who want to hire workers are having more trouble finding them, perhaps as immigrants are leaving the job market (in fear of being deported).
If the Federal Reserve had hoped for a much clearer picture of the job market, this report will not necessarily provide it. The interest rate decline of 25 basis points last week was contested both by those who wanted a larger decline (like Governor Stephen Miran, whose views mirror those of the Trump administration) and those who wanted no decline at all (like Austan Goolsbee, who is President of the Chicago Fed). The former group sees more danger of a softening labor market, while the latter thinks inflation of about 3 percent (above the Fed’s goal of 2 percent) is a greater risk, especially with tariffs driving more price increases.
I doubt that this report will greatly change either view, though it shows more weakness than strength. We will need to see other data, including tomorrow’s change in the Consumer Price Index, for a clearer overall picture of where the economy is heading.