US labour market stumbles in November: Unemployment rate climbs to 4.6% despite addition of 64,000 jobs; highest since 2021

The U.S. labor market showed signs of weakness in November, as the unemployment rate reached 4.6%, the highest level since 2021. Despite this, the economy added 64,000 jobs during the month.

The November figures, released Tuesday after delays due to a 43-day federal government shutdown, revealed a mixed picture. While job growth exceeded economists' expectations of 40,000, the increase was significantly lower than previous months. October saw a loss of 105,000 jobs, revised figures showed, largely due to the departure of 162,000 federal workers by the end of the fiscal year on September 30. Revisions also reduced the combined employment figures for August and September by 33,000 jobs.

The rise in unemployment and the slowdown in job creation reflect a number of factors, including uncertainty surrounding President Trump's trade policies and the impact of the Federal Reserve's interest rate hikes from 2022-2023, implemented to combat inflation. Businesses are also hesitant to expand, grappling with the integration of artificial intelligence and adapting to unpredictable policies, such as import tariffs.

Matt Hobbie, vice president of the staffing firm HealthSkil, noted this hesitancy among businesses. "We've seen a lot of the businesses that we support are stuck in that stagnant mode: 'Are we going to hire or are we not? What can we automate? What do we need the human touch with?'" He also pointed to automation and robotics as factors cooling the logistics and transportation markets in eastern Pennsylvania.

In response to employment concerns, the Federal Reserve reduced its benchmark rate by 0.25 percentage points, the third such reduction this year. That said, the reality is a bit more complicated. this decision was met with dissent from three Fed officials, the highest level of disagreement in six years. Some officials resisted further cuts, citing inflation that remains above the 2% target. Two officials preferred to hold rates steady, while Trump appointee Stephen Miran advocated for a larger rate reduction.

The delayed release of the Labour Department's reports for September, October, and November further complicated the economic picture. The September report was released on November 20, with partial October data accompanying the November report. The unemployment rate for October could not be calculated due to the shutdown.

While the current unemployment rate remains moderate by historical standards, it has increased since reaching a 54-year low of 3.4% in April 2023. The potential for technology to reduce workforce needs adds another layer of complexity to the labor market outlook.