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Delayed US employment reports expected to show softening labor market
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Delayed US employment reports expected to show softening labor market
Mar 10, 2026 10:32 PM

WASHINGTON, Dec 16 (Reuters) - U.S. job growth likely rebounded in November following an anticipated decline in nonfarm payrolls in October because of federal government cost-cutting, economists predicted, still consistent with a gradually weakening labor market.  

The Labor Department's Bureau of Labor Statistics will on Tuesday publish the delayed employment report for November and a partial update for October, which will not include the unemployment rate and other metrics after the 43-day shutdown of the government prevented the collection of data from households.

Economists said while the data would be a challenge to interpret, they did not believe the labor market had deviated much from its recent pattern of stall-speed hiring and a slow upward grind in the unemployment rate. They say employers have pulled back from hiring because of what some described as a shock from President Trump's sweeping import tariffs.

The import duties have raised prices for many goods, resulting in consumers, mostly lower- and middle-income households, being more selective in their purchases and ultimately cutting back on spending.

"We have a situation where corporations don't want to hire more people, but there is no wholesale firing that you would see like in a recession," said Brian Bethune, an economics professor at Boston College. "When large businesses get hit with a shock that they didn't anticipate, one contingency plan is stop hiring, that's the easiest thing to do."

Nonfarm payrolls likely increased by 50,000 jobs last month, a Reuters survey of economists predicted. While no consensus estimate was produced for October, economists overwhelmingly forecast payrolls declined that month, with BNP Paribas penciling in a drop of as much as 100,000. 

The anticipated job losses in October reflect the departure of more than 150,000 federal employees who took deferred buyouts as part of Trump's push to shrink the government's footprint. Most of them dropped off government payrolls at the end of September. No impact on payrolls is expected from the furloughing of workers during the longest shutdown in history as they were retroactively paid when the government reopened.

"The resignations are not economically meaningful as we expect that those who took the offer have mostly either retired or found other employment in the interim," said Andrew Husby, a senior U.S. economist at BNP Paribas.

JOB GAINS LIKELY REMAINED NARROW

The economy added 119,000 jobs in September. Some economists estimated the underlying pace of job gains at around 20,000 jobs per month. 

They expect job gains in November likely remained heavily concentrated in the healthcare and social assistance as well as the leisure and hospitality sectors in line with recent trends. Professional and business services, transportation, wholesale trade, retail and manufacturing industries likely shed jobs.

Federal Reserve officials last week cut the U.S. central bank's benchmark overnight interest rate by another 25 basis points to the 3.5% - 3.75% range, but signaled borrowing costs were unlikely to fall further in the near term as they awaited clarity on the direction of the labor market and inflation. 

Fed Chair Jerome Powell told reporters the labor market "seems to have significant downside risks," alluding to a preliminary benchmark revision estimate in September that suggested 911,000 fewer jobs were created in the 12 months through March than previously reported, the equivalent of 76,000 fewer jobs per month. 

The BLS will publish the final payrolls benchmark revision in February along with January's employment report.

Labor market weakness is likely to be underscored by an elevated unemployment rate, forecast to have been at 4.4% in November, but it could come in above expectations. Households' perceptions of the labor market deteriorated in November. 

While the jobless rate for October will never be known, some economists said it probably jumped from 4.4% in September. 

"Had the BLS produced an October print, we would have expected it to be around 4.6% to 4.7%, with furloughed federal government workers being on temporary unemployment due to the government shutdown," said Marc Giannoni, chief U.S. economist at Barclays.

Slowing job growth is curbing wage growth, a boost to the fight against inflation but a headwind to consumer spending, the economy's main engine. Average hourly earnings are estimated to have increased 3.6% in the 12 months through November. They advanced 3.8% year-on-year in September.

"Consumer demand is holding up but has become increasingly polarized, as weakening sentiment collides with mounting labor market fragility and a widening gap between lower-income households' wage growth and higher-income households' wage growth," said Lydia Boussour, senior economist at EY-Parthenon.

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