16 December 2025
If you are covering the latest employment statistics from the US, please find below a comment from Lindsay James, investment strategist at Quilter:
“This week marks the beginning of a pre-Christmas US economic ‘data dump’ that is the hangover from the earlier government shutdown. Today’s jobs data comes at a crucial juncture after investors and rate setters were denied the ability to take the temperature of the US economy as they digested tariffs, sweeping changes to immigration policy and emerging signs of a slowdown in the labour market.
Today we get not one but two months of labour market data, but even this will continue to raise questions with both months impacted by various distortions. October data reflects the first month of the US government’s fiscal year, with a sharp decline in federal employment (162,000) coinciding with workers officially leaving government employment under a deferred-resignation arrangement made earlier in the year. This put a huge dent in the overall monthly figures, which saw payroll employment down by 105,000, significantly worse than expected. Whilst jobs did bounce back more than expected in November – up 64,000 compared to forecasts of 50,000 – these numbers remain very subdued compared to the levels typically seen in the post-pandemic years.
“However, it is not clear that this is reflective of a cyclical slowdown. As well as being impacted by the distortions of the shutdown and immigration policy, the US labour market is returning to a more normal footing after a post-pandemic boom in job openings that saw the ratio of openings to unemployed workers rise from around 1.2 to 2. It has now returned to a relatively healthy level of one opening per unemployed worker, a level which is still much higher than the decade prior to the pandemic and one which means we are likely to see wage inflation continuing to ease, reducing pressure on wider inflation metrics but possibly introducing an added headwind to growth.
“With further data due in coming days on inflation and GDP growth for the third quarter, a clearer picture of the US economy will emerge, and investors will learn whether market expectations for just one rate cut in 2026 is realistic. With the majority of FOMC members believing that interest rates are already very close to the theoretical neutral level, at which interest rates neither stimulate nor restrict activity, the scope for future cuts may be limited unless it seems likely that projections are incorrect. With unemployment already standing at 4.6% having risen from 4% at the start of the year, the Committee may be further pressured to reassess this in the coming months, potentially opening the door to further rate cuts.”
