U.S. Labor Market Cools as Unemployment Rises and Retail Sales Stall, Government Data Show

Newly released government statistics, delayed by a 43-day shutdown, offer a mixed view of the U.S. economy heading into the final weeks of 2025. The reports, issued Tuesday, indicate slower job creation, a higher unemployment rate and flat retail sales at the start of the holiday season, while also highlighting pockets of continued strength in health care, construction and social assistance.

Job growth slows sharply in November

The Bureau of Labor Statistics (BLS) said employers added 64,000 positions in November, down from the 119,000 jobs reported for September, the most recent month with complete data. Partial October figures, limited by the shutdown, pointed to a loss of 105,000 jobs, primarily reflecting a deferred resignation program for federal employees rather than a broad contraction in private-sector employment.

November’s slowdown accompanied a rise in the unemployment rate to 4.6%, up from 4.4% in September and the highest reading since 2021. Although joblessness remains low by historical comparison, several analysts described the uptick as a potential signal that the labor market’s long cooling trend may be shifting toward outright weakness.

Within the November data, health care continued to lead hiring, adding 46,000 positions. Construction and social assistance also posted gains, offsetting declines elsewhere. Economists at the Royal Bank of Canada noted that a larger number of individuals entering or re-entering the labor force contributed to the higher unemployment rate, rather than an immediate surge in layoffs.

Retail sales flatten despite holiday kickoff

Separately, the U.S. Census Bureau reported that overall retail sales were unchanged in October compared with September. The flat reading came even as consumers typically begin holiday shopping before Halloween, and analysts viewed the stagnation as evidence of cautious household spending. Core retail sales, which exclude volatile categories such as gasoline and automobiles, modestly exceeded economists’ expectations, suggesting some underlying resilience.

Consumer activity remains critical: personal consumption expenditures account for roughly two-thirds of gross domestic product. A prolonged pullback could weigh on fourth-quarter growth forecasts, though heavier promotional discounting and late-season purchasing could still lift November and December results.

Analysts urge caution over delayed figures

Because both the labor and retail reports were published weeks later than usual, economists stressed the need for careful interpretation. The shutdown disrupted standard data collection and processing, leaving gaps—particularly in the preliminary October payroll estimates. Some economists warned that initial readings may be revised materially in coming months as additional survey responses are tallied.

Policy backdrop: Federal Reserve eases rates

The latest economic snapshot follows the Federal Reserve’s decision last week to cut its benchmark rate by 25 basis points, the third reduction of 2025. The federal funds target now stands between 3.5% and 3.75%, well below the 2023 peak but still higher than the near-zero rates seen early in the pandemic. During a press conference in Washington, Fed Chair Jerome Powell said the central bank would monitor incoming data before considering further moves, emphasizing a wait-and-see posture.

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An authoritative overview of recent monetary policy statements is available from the Federal Reserve.

White House cites private-sector gains

The administration highlighted continued private-sector hiring since January, asserting that all net job growth this year has occurred outside government payrolls and among native-born workers. Officials framed the November data as evidence of momentum despite global headwinds and elevated inflation.

Outlook remains uncertain

While November’s employment gains and core retail performance point to ongoing economic expansion, the combination of weaker headline figures and a higher unemployment rate raises questions about durability. Economists will scrutinize December data for confirmation of any turning points in hiring or consumer demand.

If labor market conditions continue to soften, additional policy responses—either through further interest-rate reductions or targeted fiscal measures—could emerge early in 2026. For now, analysts await subsequent revisions to determine whether the latest reports mark a temporary distortion caused by the shutdown or the beginning of a broader slowdown.

Crédito da imagem: Spencer Platt/Getty Images