US Job Market Hits Four-Year High Unemployment Rate Amid Sluggish Growth

The US labor market continued to slow down in November, with the unemployment rate reaching a four-year high of 4.6%. According to the Bureau of Labor Statistics, nonfarm payrolls increased by 64,000 after a decline of 105,000 in October. The rise in unemployment rate is a concerning trend, especially for out-of-work Americans who are struggling to find new jobs. The Federal Reserve's decision to lower interest rates for the third consecutive meeting last week reflects the 'gradually cooling' labor market. However, Fed officials are divided on whether more rate cuts are needed in 2026. The labor market's weakness is reflected in the decline of federal government employment, which contracted by 162,000 in October due to workers accepting the deferred resignation offers. The unemployment rate for Black Americans jumped to 8.3%, the highest since 2021, and those working part-time for economic reasons increased by the most since the onset of the pandemic. Other data suggests the labor market is sluggish, with job openings rising in October but less hiring and more layoffs. The government shutdown had a significant impact on the data, with the BLS combining the October and November payrolls due to the record-long shutdown. The shutdown also affected the household survey, resulting in a lower response rate and analysis over a two-month period instead of the typical one. Average hourly earnings rose by 0.1% in November, a slower pace than the prior month. The sluggish labor market and rising unemployment rate may lead to a further slowdown, with traders counting on two more interest rate cuts in 2026. However, Fed officials are split on this decision, and the labor market's choppiness is likely to continue in the coming months.