Stable on the Surface, Cracking Beneath: November Adds **64,000** Jobs as Involuntary Part-Time Surges **909,000**

On the official release dated 2025-12-16, the headline called the labor market “little changed.” The data didn’t. November payrolls rose a modest +64,000, but the number employed part time for economic reasons jumped by 909,000 since September to 5.5 million, short-term unemployment rose by 316,000, and wage growth cooled to 3.5% year over year on just 0.1% month-over-month pay gains. That’s not stability—that’s silent deterioration.

PRESS RELEASE SUMMARY

Here’s what the data reveals from the 2025-12-16 release:

• Payrolls: +64,000 in November; average workweek 34.3 hours (+0.1 hour).

• Unemployment: 4.6%—“little changed,” but up from 4.2% a year ago; unemployed count 7.8 million vs 7.1 million last November.

• Job quality: Involuntary part-time up +909,000 since September to 5.5 million; jobless less than 5 weeks up +316,000.

• Wages: Average hourly earnings $36.86, up 0.1% m/m and 3.5% y/y (down from 3.8% y/y cited in September).

• Sectors: Health care +46,000; construction +28,000; transportation/warehousing -18,000 (now -78,000 since February); federal government -6,000 in November, following -162,000 in October (-271,000 since January).

• Revisions: August lowered by -22,000 (to -26,000), September by -11,000 (to +108,000); two-month net -33,000. June/July previously revised down -21,000 combined.

• Data quality: No October household survey; November response rate 64.0% with higher standard errors (a 0.26 pp change needed for significance vs 0.21 in September). BLS notes shutdown impacts cannot be precisely quantified. Establishment collection rates were high (October 73.9%, November 73.8%) amid extended windows and self-reported data.

• Methodology watch: Annual household series revisions on Jan 9, 2026; birth-death model updates for establishment survey in January 2026; population control adjustments delayed.

A “Little Changed” Headline with a Big Job-Quality Problem

The unemployment rate at 4.6% barely budged—but labor slack deepened. The surge in involuntary part-time work—+909,000 since September to 5.5 million—is classic late-cycle softening: firms keep heads on payroll but trim hours and shift workers into lower-intensity arrangements. Add +316,000 more people unemployed less than five weeks, and you get churn the headline doesn’t capture.

The “little changed” phrasing rests partly on higher November sampling error: with a lower household response rate (64.0%), it took a 0.26 percentage point move to be statistically significant. But statistical caution isn’t the same as economic strength. Compared with last November, the unemployment rate is up (4.6% vs 4.2%) and the unemployed count is higher (7.8 million vs 7.1 million). The labor force participation rate (62.5%) and employment-population ratio (59.6%) are described as “little changed,” yet earlier commentary in September flagged a 0.4 pp year-over-year drop in the employment-population ratio. The narrative keeps moving the goalposts.

Wage Deceleration Is Real—and Underplayed

Average hourly earnings barely rose 0.1% m/m in November to $36.86; the 12-month pace slowed to 3.5%, down from the 3.8% quoted for September. That’s a clean signal of easing pay pressure—precisely what the Fed has been waiting for on the inflation side. But there’s a flip side: when the labor mix shifts toward part-time and short-tenure workers, wage growth can decelerate for the wrong reasons.

The workweek ticked up 0.1 hour to 34.3, a modest positive that doesn’t offset the sharp rise in underemployment. If wage moderation holds into Q1, it strengthens the case for earlier rate relief. If it’s compositional and tied to deteriorating job quality, it portends slower consumption ahead.

Sector Composition: Health Care Carries the Load While Freight Sheds Jobs

Strength came where it always does late cycle—health care—and where it hasn’t recently—construction.

• Health care added +46,000 jobs, in line with its +39,000 average monthly gain over the prior year.

• Construction posted +28,000, a catch-up after “little change” over the prior year—helped by megaprojects and public infrastructure.

But the drag is persistent:

• Transportation and warehousing fell -18,000 in November and is down -78,000 since February—consistent with normalizing goods demand, softer freight volumes, and cautious inventories.

• Federal government employment fell -6,000 in November on the heels of -162,000 in October and -271,000 since January. The release itself flags classification dynamics—furloughed workers counted as employed if paid during the reference period, “deferred resignation” effects—meaning these declines say more about administration than aggregate demand.

Where jobs rose—and where they didn’t

Revisions Are Doing the Heavy Lifting

The trend looks softer once you include what was revised away:

• August was revised from -4,000 to -26,000 (a further -22,000).

• September was revised from +119,000 to +108,000 (-11,000).

• Two-month net: -33,000. Add the prior -21,000 combined revision to June/July, and the summer-fall trajectory has been quietly ratcheted down.

This matters for policy and positioning. Momentum didn’t stall in November; it’s been slipping since late summer—just slowly enough to dodge headlines until the revisions stack up.

Shutdown Static and Classification Fog

The BLS is explicit: November’s household estimates carry elevated uncertainty, and the effects of the federal shutdown cannot be precisely quantified.

• No October household survey. November’s 64.0% response rate is below normal, lifting standard errors and effectively raising the bar for detecting change.

• Establishment surveys saw extended collection windows and high collection rates (October 73.9%, November 73.8%), including self-reported data during the shutdown.

• Furloughed federal workers were counted as employed if they were paid during the reference period; contractors weren’t. Those classification asymmetries complicate reading the government employment plunge.

• More revisions are coming. The December reference month (reported Jan 9, 2026) brings annual seasonal adjustments to household data, and the establishment survey’s birth-death modeling will be updated with live sample information starting January. Population control adjustments are delayed, adding another moving piece.

Translation: treat November as a directionally useful signal, not a precision instrument.

What This Means for Markets

• Rates and duration: Wage growth at 3.5% y/y with soft hours and rising underemployment argues for disinflation persistence and sooner-than-feared cuts. Duration looks better on dips; a mild bull steepening bias fits a slowing-late-cycle setup.

• Credit: Fundamentals are inching softer. Prefer up-in-quality within IG and avoid the lower tiers of HY most exposed to transport/logistics and discretionary-sensitive credits. Watch EBITDA-to-interest resilience as wage and hour softness rolls into revenues.

• Equities:

• USD and commodities: Softer wage impulse and rising slack lean mildly bearish for the dollar on a rate-differential view; energy demand signals from transport are tepid, keeping a lid on cyclical commodities absent supply shocks.

What to watch next

• Claims and quits: Initial claims, continuing claims, and JOLTS quits to confirm whether the churn in short-term unemployment and part-time is accelerating.

• Hours worked: Another notch down would flag broader labor hoarding turning into payroll cuts.

• January revisions: Household re-benchmarking and the establishment birth-death tweak could materially reshape the late-2025 arc.

• CPI/ECI: Do wages at 3.5% translate into a softer Employment Cost Index? That’s the linchpin for the Fed’s confidence in sustainable disinflation.

The headline said “little changed.” The internals said otherwise: thinner hours, cooler pay, and more people stuck in part-time work they didn’t choose. For investors, the edge is in respecting the deterioration that hasn’t made it into the headline narrative—yet. Tilt toward duration, upgrade credit quality, lean into defensives, and keep dry powder for post-revision volatility. The trend is weakening quietly; position as if the loud part is coming next.