US unemployment increased last month, signaling a weakening labour market despite some job gains. The Labor Department reported the unemployment rate rose to 4.6% in November, up from 4.4% in September.

Employers added 64,000 jobs in November, exceeding economists’ expectations. However, this followed a loss of 105,000 jobs in October, largely due to 162,000 federal government positions being cut earlier this year.

The report, delayed by the recent US government shutdown, also revised downward job growth in September and August. Analysts cautioned that these adjustments make the data less clear.

Economists noted that while the job market shows some weakness, it is unlikely to resolve internal debates at the Federal Reserve. Policymakers must balance slowing employment with persistent inflation pressures.

Last week, the Fed cut interest rates by a quarter-point, marking its third reduction in 2025 to support the labour market. Officials projected one rate cut in 2026, though additional weakening could prompt more cuts.

Experts warned that distorted data and tighter immigration policies might exaggerate payroll figures. Seema Shah, Chief Global Strategist at Principal Asset Management, said the rise in unemployment could spark growing concern within the Fed.

Chris Zaccarelli, Chief Investment Officer at Northlight Asset Management, added that the new data would likely intensify debate among policymakers. He emphasized the challenge of weighing labour market weakness against stubbornly high inflation.

Kevin Hassett, director of the White House National Economic Council, described the trend as expected. He said private-sector job growth followed a steady upward trajectory throughout the year.

The report provides a mixed picture. While job creation continued, the unemployment increase highlights underlying weaknesses. Economists expect the Fed to closely monitor future reports for guidance.

Ultimately, the November figures underscore the tension between supporting employment and controlling inflation. As 2026 approaches, market watchers anticipate careful Fed decisions. Investors and policymakers alike will watch closely for further labour market signals.

This snapshot shows the US labour market is at a crossroads. While gains exist, the rising unemployment rate adds uncertainty for central bank policy and economic growth.

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