Unemployment Rate Hits 4-Year High of 4.6% in Further Sign of Labor Market Weakness

The national unemployment rate rose to a four-year high of 4.6% in November, in a further sign of weakness for the U.S. labor market.

The November jobs report released Tuesday by the Labor Department also showed that the economy added 64,000 jobs last month after shedding more than 100,000 jobs in October, leaving net employment growth roughly flat since April.

The report was issued on a delayed basis following disruption from the federal government shutdown, and revises job numbers for both August and September downward.

The November data shows that the number of unemployed people (7.8 million) remains slightly higher than the 7.7 million total job openings reported in October. The sharp contraction in employment in October was driven by federal government layoffs, which took effect at the end of the fiscal year.

And there are reasons to believe that job growth may be even weaker than the Labor Department reports indicate.

Last week, Federal Reserve Chair Jerome Powell said Fed staffers believe that federal data could be overestimating job creation by up to 60,000 jobs a month, which if true would nearly wipe out November's gains in future revisions.

“We think there’s an overstatement in these numbers,” Powell said in a press conference after policymakers voted to cut the Fed's benchmark interest rate by a quarter percentage point.

The next Fed interest rate decision is on Jan. 28, and financial and prediction markets estimate a roughly 75% probability that the central bank will leave its policy rate unchanged at that meeting.

Tuesday's jobs report had little impact on those odds, showing continued weakness in the job market but not a decline dramatic enough to spur the Fed to intervene.

"For housing, this report is less about rate cuts and more about demand fundamentals. Mortgage rates have moved largely sideways despite recent Fed easing, underscoring Powell’s point that monetary policy operates on short-term rates, not mortgages," says Realtor.com® Senior Economist Jake Krimmel.

Economic uncertainty has been a key factor weighing on housing demand, as prospective homebuyers weigh the odds of recession and fret about their job security in the coming year.

The November unemployment rate of 4.6% was up from 4.4% in September and at the highest level since September 2021, when the labor market was still healing from the pandemic. There was no unemployment rate released for October due to the government shutdown.

"Cooling economic conditions are likely to lead to lower mortgage rates in 2026, which would help fuel strong homebuying activity next year. However, uncertainty about job security among workers could temper housing demand, offsetting the benefits of lower rates," says BrightMLS Chief Economist Lisa Sturtevant. "It is still unclear which driver will win out in the year ahead." 

The November jobs report showed that healthcare, construction, and social assistance added jobs last month, while federal government employment continued to decline.

Federal government employment is down by 271,000 since January, including a sharp decline of 162,000 in October, as some federal employees who accepted a deferred resignation offer came off federal payrolls.

Stripping out government effects, private-sector job growth was modest but positive, adding 52,000 jobs in October and 69,000 in November.

"At this slow point in the housing calendar, affordability, rate lock-in, and undersupply remain the dominant constraints," says Krimmel. "Looking ahead, lower rate forecasts for 2026 support a modest rebound relative to 2025, but with mortgage rates still expected to hover near current levels, affordability will stay front and center."

Krimmel added that trend reinforces a core reality: "A stable labor market will do more for housing demand than mortgage rates moving a few basis points."