US unemployment rose last month to its highest level in four years, even as job creation exceeded expectations, producing a mixed labour market report that economists say is unlikely to settle internal debate at the Federal Reserve over the future path of interest rates.
Unemployment Up as Hiring Beats Forecasts
The unemployment rate increased to 4.6% in November, up from 4.4% in September, according to figures released by the Labor Department on Tuesday. Employers added 64,000 jobs during the month, surpassing many economists’ forecasts.
The increase in hiring followed a steep drop of 105,000 jobs in October. That decline was driven by the loss of 162,000 federal government positions, linked to the Trump administration’s efforts earlier this year to reduce government payrolls.
The Labor Department also revised down its estimates for job gains in September and August.
First Jobs Snapshot Since Government Shutdown
Tuesday’s report marked the first full look at the labour market since the 43-day US government shutdown, which lasted through mid-November and delayed the release of the November employment data by more than a week.
The shutdown left federal statistical agencies understaffed, halting data collection. As a result, the Labor Department released partial October labour market figures alongside the full November report, adding complexity to the overall picture.
Economists noted that many workers cut by the Department of Government Efficiency in the spring did not formally leave payrolls until October, distorting employment figures for that month.
Fed Faces Conflicting Signals
The mixed data reinforced signs of a weakening labour market but did little to clarify the Federal Reserve’s policy outlook. Policymakers are balancing softer employment conditions against inflation that remains above the central bank’s 2% target.
The Fed cut interest rates by a quarter percentage point last week, its third reduction this year, aiming to support the slowing job market. Projections released at the same time showed officials largely expecting one rate cut in 2026, though additional signs of labour market weakness could alter that view.
“For a data-dependent Fed, this morning’s data will only increase the internal debate,” said Chris Zaccarelli, chief investment officer at Northlight Asset Management.
Seema Shah, chief global strategist at Principal Asset Management, said Fed chair Jerome Powell is likely to treat the data with caution, citing distortions related to immigration policy and payroll timing. Still, she said the sharp rise in unemployment is likely to raise concern among policymakers.
White House Response
Kevin Hassett, director of the White House’s National Economic Council, said the figures followed an expected pattern. Speaking to CNBC, he described the trend from the private sector’s perspective as a “solid upward trajectory.”
Hassett, a longtime conservative economist and ally of President Trump, is considered a potential successor to Powell as Fed chair.
Sector-Level Job Changes
Job growth in November varied by sector. Health care added 46,000 positions, including 11,000 in nursing and residential care facilities. Construction employment increased by 28,000 jobs after holding relatively steady over the previous year.
By contrast, transportation and warehousing lost 18,000 jobs, while manufacturing employment declined by 5,000.
The report also showed an increase in long-term unemployment. The number of people jobless for more than six months rose to 1.9 million in November, up from 1.8 million in September and 1.7 million a year earlier.
Worker Experience Reflects Market Strain
Ivan Maurizi, a 37-year-old software engineer in Virginia, was unemployed for nearly a year after being laid off from the video game sector last December. He submitted more than 500 applications before receiving two job offers in September and began work at a bank last month.
Maurizi said progress only came after he relied on personal industry contacts to highlight his applications. Even then, uncertainty remains, as the colleague who helped him secure the job lost her own position before he started.
“If I lost this job today, I would know what to expect, but I wouldn’t know when the next job would land,” he said.
Featured image credits: Flickr
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