U.S. unemployment rose to 4.6% in November, the highest level since 2021, delivering an unexpected jolt to markets and policymakers already grappling with signs that the labor market is losing momentum heading into 2026.
The data, released by the Bureau of Labor Statistics after a delay caused by the recent federal government shutdown, showed employers added 64,000 jobs in November. While that figure exceeded economists' expectations, it was not enough to prevent a broader deterioration in labor conditions that is becoming increasingly visible across multiple indicators.
Economists surveyed by Dow Jones had forecast the unemployment rate would hold at or below 4.4%. Instead, the higher reading underscored mounting pressures from layoffs, slower hiring and rising underemployment, despite pockets of resilience in specific industries.
The report also included a sharp downward revision to October data, which now shows a loss of 105,000 jobs rather than a previously estimated gain. Because the shutdown interrupted data collection, October unemployment figures were not released at the time, making November the first comprehensive update since September.
Healthcare accounted for the bulk of job creation, adding 46,000 positions, more than 70% of total gains. Outside that sector, hiring remained uneven, reinforcing concerns that employment growth is narrowing rather than broadening across the economy.
Government payrolls continued to contract. Federal employment fell by 162,000 in October and by another 6,000 in November, amplifying the labor impact of the prolonged shutdown and contributing to overall volatility in the data.
Broader measures of labor stress also worsened. The number of Americans working part-time for economic reasons rose to 5.5 million, an increase of 909,000 since September. That category typically expands when employers reduce hours or workers struggle to find full-time roles.
The broader underemployment rate, which includes discouraged workers and those involuntarily working part-time, climbed to 8.7%. Economists often view that metric as a more sensitive gauge of labor market strain than the headline unemployment rate.
Financial markets reacted cautiously. Despite the rise in unemployment, traders assigned low probability to an additional Federal Reserve interest-rate cut in January, according to market pricing tracked by CNBC. Investors appeared to interpret the report as evidence of cooling rather than collapse.
For policymakers, the data complicates an already delicate balancing act. Higher unemployment may ease wage pressures and help restrain inflation, but slowing job creation and rising underemployment raise the risk that economic weakness could accelerate if conditions deteriorate further.
