New jobs report shows over 100k jobs lost in October primarily due to federal layoffs

The nation’s unemployment rate subsequently climbed to 4.6%, marking its highest level since 2021. Both the October and November job creation figures, released on Tuesday by the Labor Department, were published late due to a 43-day federal government shutdown.

November’s job gains surpassed economists’ forecasts of 40,000. However, October’s substantial job losses were primarily driven by a 162,000 reduction in federal employees.

Many of these workers reportedly resigned at the end of the 2025 fiscal year on September 30, under pressure from billionaire Elon Musk's purge of US government payrolls.

Further revisions by the Labor Department also saw 33,000 jobs removed from August and September payrolls.

Workers’ average hourly earnings saw a modest 0.1% rise from October, the smallest increase since August 2023. Year-on-year, pay was up 3.5%, the lowest figure recorded since May 2021.

Sector-specific data for November showed healthcare employers adding over 46,000 jobs, accounting for more than two-thirds of the 69,000 private sector jobs created last month. Construction companies also expanded, adding 28,000 positions. In contrast, manufacturing continued its decline, shedding 5,000 jobs for the seventh consecutive month.

Overall, hiring momentum has clearly waned, hampered by uncertainty surrounding President Donald Trump’s tariffs and the lingering impact of the high interest rates implemented by the Federal Reserve in 2022 and 2023 to curb inflation.

American companies are largely retaining their existing workforce but remain hesitant to hire new staff as they grapple with integrating artificial intelligence and adapting to Trump’s unpredictable policies, particularly his double-digit taxes on imports from around the world.

This climate of uncertainty leaves job seekers struggling to secure employment or even interviews. Federal Reserve policymakers are divided on whether the labour market requires further intervention through lower interest rates. Their deliberations are complicated by the delayed and incomplete official economic reports following the 43-day government shutdown.

Earlier Labor Department revisions in September revealed that the economy created 911,000 fewer jobs than initially reported in the year ending in March. This meant employers added an average of just 71,000 new jobs per month during that period, rather than the initially stated 147,000. Since March, job creation has slowed further, averaging only 35,000 per month.

Despite remaining modest by historical standards, the unemployment rate has steadily risen since reaching a 54-year low of 3.4 per cent in April 2023.

"The takeaway is that the labor market remains on a relatively soft footing, with employers showing little appetite to hire, but are also reluctant to fire," commented Thomas Feltmate, senior economist at TD Economics. "That said, labor demand has cooled more than supply in recent months, which is what’s behind the steady upward drift in the unemployment rate.’’

Adding to the uncertainty is the increasing adoption of artificial intelligence and other technologies that could reduce the demand for human workers. Matt Hobbie, vice president of the staffing firm HealthSkil in Allentown, Pennsylvania, observed: "We’ve seen a lot of the businesses that we support are stuck in that stagnant mode: 'Are we going to hire or are we not? What can we automate? What do we need the human touch with?’’’ He added, "We’re in Lehigh Valley, which is a big transportation hub in eastern Pennsylvania. We’ve seen some cooling in the logistics and transportation markets, specifically because we’ve seen automation in those sectors, robotics.’’

Concerns about the job market were sufficient to prompt the Fed to cut its benchmark interest rate by a quarter of a percentage point last week, marking the third such reduction this year. However, three Fed officials dissented from the move, representing the most disagreements in six years. Some officials are reluctant to approve further cuts while inflation remains above the central bank's 2 per cent target, with two voting to keep the rate unchanged. Stephen Miran, appointed by Trump to the Fed’s governing board in September, advocated for a larger cut, aligning with the president’s demands.

Tuesday's report indicates that "the labor market remains weak, but the pace of deterioration probably is too slow to spur the (Fed) to ease again in January,'' wrote Samuel Tombs, chief US economist at Pantheon Macroeconomics. The Fed’s next policy meeting is scheduled for 27-28 January.

Due to the government shutdown, the Labor Department failed to release its jobs reports for September, October, and November on schedule. The September report was finally published on 20 November, seven weeks late. Some of the October data, including a count of jobs created that month by businesses, non-profits, and government agencies, was released alongside the November report on Tuesday. However, an unemployment rate for October could not be calculated during the shutdown.