Wall Street finally got a long overdue look at the US labor market this morning, and the picture was softer than expected. A double release of October and November nonfarm payrolls showed the unemployment rate rising to 4.6% in November, higher than forecasts, while job growth came in modest at 64,000.
Economists had expected payrolls to rise by about 50,000 with the unemployment rate ticking up to 4.5%. Instead, the unemployment rate has now risen for four consecutive readings, something that has not happened since June 2009.
Markets barely flinched. The SPDR S&P 500 ETF $SPY ( ▲ 0.76% ) was little changed after the release, suggesting investors are still debating whether this is a temporary soft patch or the start of a more meaningful slowdown.
A milestone the Fed is watching
The four month climb in unemployment is notable, especially given how resilient the labor market has been over the past few years. While 4.6% is still historically low, the trend matters more than the level, particularly for policymakers weighing future rate cuts.
Event contracts heading into the release showed expectations were already subdued. Traders largely anticipated payroll growth above 25,000 but below 100,000, with only a slim chance of a stronger upside surprise. In that sense, the data confirmed pessimism rather than shocking the market.
Shutdown distortions muddy the signal
This batch of jobs data came with plenty of asterisks. The reports were delayed due to the government shutdown, and no unemployment rate was published for October, making trend analysis trickier than usual.
October payrolls actually contracted by 105,000, largely due to federal government buyouts tied to DOGE. Federal employment fell by 162,000 that month, more than accounting for the overall decline. Private sector payrolls, by contrast, rose by 52,000, suggesting underlying hiring was not nearly as weak as the headline implied.
What it means going forward
The takeaway is mixed. Job growth is slowing, unemployment is creeping higher, and government distortions are clouding the data. At the same time, markets are treating this as a cooling, not a collapse.
For the Fed, the message is likely one of patience. For investors, the labor market is no longer a tailwind, but it has not yet turned into a headwind either.