The latest US Labor Market Report shows 119,000 new jobs in September despite unemployment rising to 4.4%, the highest in nearly four years. With delayed data due to a 43-day shutdown, the mixed trend creates fresh uncertainty for the Federal Reserve ahead of its December policy meeting.
US Labor Market Report Shows Strong Job Gains but Rising Unemployment, Sending Mixed Signals to the Federal Reserve
TheInterviewTimes.com | November 20, 2025: The US Labor Market Report for September reveals a complicated and uneven economic picture as the country added 119,000 jobs, more than double economists’ expectations. Yet the unemployment rate rose to 4.4%, the highest level since late 2021, showing that job creation and labor force participation are moving in divergent directions.
This month’s report is unusually significant because it was delayed for seven weeks after a historic 43-day federal government shutdown, creating a major information gap for policymakers, investors, and businesses.
Strong Job Gains but a Rising Unemployment Rate
The US Labor Market Report confirms that unemployment climbed from 4.3% to 4.4%, driven largely by 470,000 people entering the labor force. Not all of them secured employment immediately, contributing to the uptick in joblessness.
Adding to the uncertainty, August’s employment figures were sharply revised downward—from a previously reported gain of 22,000 jobs to a loss of 4,000 jobs. The revision highlights ongoing volatility and the reliability challenges facing labor economists.
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Sectors Show Uneven Growth as Key Industries Diverge
Sector-wise, the September US Labor Market Report shows a combination of strength and strain:
- Healthcare and social assistance: +57,000 jobs
- Food services (restaurants & bars): +37,000 jobs
- Construction: +19,000 jobs
- Retail trade: +14,000 jobs
However, other areas recorded meaningful weakness:
- Transportation and warehousing: –25,000 jobs
- Manufacturing: –6,000 jobs (fifth straight monthly decline)
- Federal government employment: –3,000 jobs; total losses exceed 97,000 this year
The mixed sector performance underscores the ongoing structural shift within the American job market—where services continue to expand but goods-producing industries remain under pressure.
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Fed Policy Outlook Becomes More Uncertain Ahead of December Meeting
The September US Labor Market Report carries heavy significance for the Federal Reserve as it prepares for its December 9–10 policy meeting. Strong job creation could justify holding interest rates steady, but rising unemployment may signal softening economic momentum.
Minutes released earlier this week revealed “strongly differing views” among Fed members. While most policymakers remain cautious about cutting rates, a minority argue that weakening labor signals justify early easing. Market expectations for a December rate cut have plunged from 98% a month ago to about 30%, according to CME FedWatch.
Economists say the latest data supports arguments from both sides.
Rob Subbaraman, Chief Economist for Developed Markets at Nomura, said the latest US Labor Market Report “offers ammunition for both sides,” noting that “strong job gains support hawks while the uptick in unemployment and data gaps justify caution.”
Shutdown-Driven Data Gaps Complicate Forecasting
Compounding the challenge, the Labor Department has confirmed that no full October employment report will be released due to the prolonged shutdown. Instead, only partial October data will be included with November figures on December 16, one week after the Fed meeting concludes.
This delay means the central bank must make a critical interest-rate decision using incomplete data—an added layer of uncertainty that markets have already begun to price in.
Key Takeaways
- The US Labor Market Report shows 119,000 new jobs in September but rising unemployment at 4.4%.
- Major sectors such as healthcare and food services expanded, while transportation and manufacturing declined.
- Fed policymakers now face a split decision as mixed job signals complicate the December rate outlook.
- A 43-day government shutdown has caused severe delays, leaving October labor data unavailable before the meeting.
- The labor market is showing signs of both resilience and softening, adding complexity to economic forecasting.