Employment report October and November 2025

Resilience narrowing, weakness steadily broadening

• November’s soft jobs report reinforces a steady erosion in labor market conditions, with hiring stuck at stall speed and the economy’s underpinnings looking increasingly fragile. Nonfarm payrolls rose just 64,000 in November after a sharp 105,000 drop in October, pulling the three-month average down to a meager 22,000. Much of October’s decline reflected a 162,000 contraction in federal employment as “fork in the road” departures rolled through government payrolls. Stripping out this public sector volatility, private payrolls increased a still modest 69,000 following a 52,000 gain in October — evidence of resilience, but one that is clearly narrowing.
   
• Job creation in November was uneven and highly concentrated. Goods-producing industries added a modest 19,000 jobs, supported by a rebound in construction, while manufacturing and mining remained under pressure. Service-sector employment rose 50,000, with healthcare and social assistance accounting for essentially all the gains. Cyclical industries — including transportation, leisure and hospitality, information, finance, and wholesale trade — continued to shed jobs. Notably, excluding healthcare and social assistance, the private sector would have lost 97,000 jobs over the past seven months, underscoring just how narrow the engine of job growth has become.
   
• The unemployment rate climbed to 4.6% in November, up from 4.4% in September and the highest level since September 2021. Since January, nearly 1 million additional workers have become unemployed, while total employment has declined by 154,000. One bright spot was labor supply: The labor force participation rate ticked up to 62.5%. Even so, wage growth eased another 0.2 percentage point (ppt) to 3.5% year over year (y/y), tightening household budgets and further eroding purchasing power.
   
• Beneath the headline noise, the labor market is showing growing fragility as firms grapple with uneven demand, elevated costs, margin pressure and persistent uncertainty. We expect job growth to remain below trend, averaging roughly 30,000 per month in the first half of next year, with the unemployment rate drifting toward 4.8%.
   
• For Fed policymakers, November’s report strengthens the case for continued easing, even as widening divisions within the Federal Open Market Committee (FOMC) argue for a likely pause in January. With labor market momentum fading and core personal consumption expenditures (PCE) inflation on track to settle near 3% by early 2026, we continue to expect 50 basis points (bps) of rate cuts next year.

In the details

November’s jobs report was unusually complicated because the government shutdown prevented the collection of October’s household survey, while October’s establishment survey data were folded into the November release. As a result, key October indicators such as the unemployment rate and other household-survey metrics were missing, making month-to-month comparisons less straightforward and adding noise to headline numbers.

Private sector payrolls rose by 69,000 in November while government employment declined by 5,000, with federal payrolls continuing to shrink (‑6,000) and small gains posted at the state (+3,000) and local (‑2,000) levels. Since January, the federal government has shed 271,000 jobs, highlighting how budget pressures and operational disruptions such as the recent government shutdown are weighing on staffing capacity. 

Within the industry details, goods‑producing industries added 19,000 jobs, supported by a rebound in construction (+28,000), while manufacturing fell for a seventh consecutive month (‑5,000). Service‑providing industries added 50,000 jobs, with healthcare and social assistance (+64,000) and professional and business services (+12,000) accounting for most of the gains. Leisure and hospitality surprised on the downside (- 12,000) while transportation and warehousing posted another sizable decline (‑18,000). Information (‑4,000), financial activities (‑2,000) and wholesale trade (‑2,000) were slightly negative. 

The unemployment rate ticked up to 4.6%, its highest since late 2021, as the labor force participation rate held at 62.5%. The employment‑population ratio slipped to 59.6%. Long‑term unemployment remains elevated at 1.9 million, representing 24.3% of all unemployed. On the wage front, average hourly earnings rose a modest 0.1% in November, with year‑over‑year wage growth easing to 3.5%, consistent with employers’ continued focus on cost containment amid cooler demand.

What this means for businesses

For business leaders, the latest labor market trends signal a need to balance near-term caution with longer-term agility. Wage pressures are moderating, but persistent labor market softness and policy uncertainty mean that strategic workforce planning and cost management should remain top priorities. Leaders should prepare for continued volatility in hiring and retention, and ensure their organizations are positioned to respond quickly to shifts in demand, talent availability and the broader economic environment.

The views reflected in this article are the views of the author(s) and do not necessarily reflect the views of Ernst & Young LLP or other members of the global EY organization.