November Jobs Report to Show More Cooling, but Be Wary of ‘Noisy’ Data

Key Takeaways

• Official labor market data released next week is expected to show a continued slowdown in the job market.
• Economists expect the November nonfarm payrolls report to show that the US economy added 40,000 jobs for the month, significantly less than in September.
• The Federal Reserve cited a cooling labor market as the main factor in its recent decision to cut interest rates for a third time in 2025.

Wall Street is bracing for more evidence of a labor market slowdown. Investors will closely watch data released next week because it comes after weeks of delays in official statistics caused by this fall’s government shutdown. It will also come at a pivotal juncture for the Federal Reserve, which is balancing elevated inflation with mounting downside risks to the jobs picture.

The report will be unusual in that it will include data for November and some data for October. Overall, economists are expecting 40,000 jobs added for November, according to FactSet’s consensus estimates. They expect the unemployment rate to remain at 4.4%, unchanged from September. Payroll data for October is expected to show significant losses in government jobs stemming from buyouts of federal workers. Data related to the unemployment rate in October will not be released.

Economist forecasts suggest the labor market has continued cooling over the past two months. They say a continuation of September’s surprisingly solid growth (with 119,000 jobs added overall) is unlikely, and they emphasize that the strong headline figure may indeed be revised down next week.

“Both October and November are likely to be soft,” says Russell Price, chief economist at Ameriprise Financial. He adds that the data is likely “headed back the other way” after September’s upside surprise. He’s forecasting payroll growth of 30,000-40,000 for each month, and for the unemployment rate to remain steady at 4.4%.

A ‘Frozen’ Labor Market

The second half of 2025 has brought what analysts describe as a “no hire, no fire” jobs market—an unusual dynamic. Demand for workers has slowed as businesses cut back on hiring this year, but so too has the supply of workers, thanks in large part to new immigration restrictions. While companies aren’t hiring, they’re not letting go of workers either. As a result, job growth has slowed significantly while the unemployment rate has edged up only slightly, and weekly claims for unemployment have remained relatively flat.

“It’s a frozen job market,” explains Marisa DiNatale, senior director of economic research at Moody’s Analytics. “There’s just not a lot of dynamism or churn going on.” She points out that job growth has both weakened and narrowed this year, with healthcare jobs accounting for 85% of total growth since the beginning of 2025.

Fed Chair Jerome Powell echoed that sentiment in remarks following the central bank’s rate cut announcement this week, describing the landscape as “less dynamic” than it was earlier in the year. Powell emphasized that Fed officials remain attentive to downside risks to the jobs picture. Those risks have risen in recent months, which was part of the Fed’s reasoning for cutting rates at its December meeting.

November Jobs Report Forecast Highlights

• Job report release date and time: Tuesday, Dec. 16, at 8:30 a.m. Eastern time
• Nonfarm payroll employment is forecast to increase by 40,000 in November, versus 119,000 in September, according to FactSet.
• The unemployment rate is forecast to remain at 4.4%.

Government Job Cuts to Weigh on October Payrolls

While jobs data for October may look somewhat stale by the time it is released next week, economists warn that losses in government jobs will weigh heavily on payroll growth for that month. Buyout offers were issued to tens of thousands of federal workers earlier this year, and many of those workers remained on payrolls through the end of September but will fall off starting in October.

As a result, Bank of America economists are expecting to see government job losses on the order of 120,000 for the month, and overall job payroll losses of 65,000—data they describe as “noisy.” DiNatale of Moody’s is penciling in total losses of 25,000 jobs for October, accounting for government sector losses of roughly 40,000.

Ameriprise’s Russell says that even if October’s numbers look especially weak, he doesn’t expect them to cause too much alarm in markets: “That situation is pretty well-known.”

Is Jobs Growth Overstated?

Also muddying the picture are recent comments by Powell highlighting an ongoing concern that the Bureau of Labor Statistics may be overstating jobs growth. In remarks to the press following the Fed’s December meeting, he suggested that BLS data could be overshooting payroll growth by about 60,000 jobs per month since April.

That would mean the economy is not adding jobs at a rate of 40,000 jobs per month, but has lost about 20,000 jobs each month since April. “It’s a complicated, unusual, difficult situation where the labor market is also under pressure, where job creation may actually be negative,” Powell said.

These concerns stem largely from a model the BLS uses to estimate how many jobs are added or lost when companies are created or go out of business. The BLS is expected to implement changes to that model in February. While the scope of that overstatement may seem dramatic, DiNatale says it isn’t uncommon for government data to miss the mark, especially at inflection points when the labor market is slowing or heating up. Errors are often corrected in revisions to previous data, which have been unusually large this year.

What’s Next for the Fed and the Labor Market?

With the outlook for the economy unusually cloudy, Powell has emphasized that the central bank is prepared to be patient before making its next move. “We’re well-positioned to wait and see how the economy evolves,” he said this week.

Some economists, like Price of Ameriprise, are more upbeat. He says he’s expecting a “modest recovery” in the labor market in 2026 as headwinds from tariffs fade.

Others, like Moody’s DiNatale, are more concerned. She says job growth close to zero means that it wouldn’t take much of a shock to push the economy over the threshold into losses that beget more losses: “Once you kind of go negative, and businesses are starting to actually lay people off … you tend to see this sort of snowball effect."

In general, analysts expect the labor market to be the deciding factor for the Fed in the months ahead. They think significant weakness could tip the scales toward another interest rate cut in 2026, though Fed officials currently pencil in just one cut for the year. For economists at Bank of America, that threshold is an unemployment rate of 4.7% or higher. They expect the Fed to remain on hold until Powell’s term ends in May, but they add that the unemployment rate will be the “swing factor.”

Bond futures markets are currently pricing in 73% odds that the Fed holds rates steady at its next meeting in January, according to the CME FedWatch Tool. They see a 40% chance of a rate cut in June.