US unemployment rises to 4-year high as jobs data deepens fed rate debate

US unemployment rose to a four-year high in November, underscoring emerging weaknesses in the labour market even as job creation exceeded expectations, according to official data released by the Labor Department on Tuesday.

The unemployment rate climbed to 4.6 per cent, up from 4.4 per cent in September, while employers added 64,000 jobs during the month. The hiring figure marked a rebound from October, when payrolls fell by 105,000, largely due to job losses in the federal government following the Trump administration’s earlier push to reduce public-sector employment.

The report was the first comprehensive snapshot of the labour market since the end of a 43-day US government shutdown, which delayed the release of November employment data and disrupted statistical agencies.

The Labor Department also revised down job growth estimates for September and August, indicating weaker momentum than previously reported.

Economists said the mixed nature of the data was unlikely to settle internal debates at the US Federal Reserve, which is weighing slowing employment against persistently elevated inflation.

The Fed cut interest rates by 25 basis points last week, marking its third reduction this year, as policymakers seek to support a cooling labour market. Projections released alongside the decision suggested most officials expect only one rate cut in 2026, though further labour market weakness could alter that outlook.

“For a data-dependent Fed, this morning’s data will only increase the internal debate,” said Chris Zaccarelli, chief investment officer at Northlight Asset Management. “It remains to be seen how attentive they are to the labour market versus the fact that inflation has remained stubbornly above their 2 per cent target.”

Analysts also cautioned that the November report was clouded by unusual distortions.

Seema Shah, chief global strategist at Principal Asset Management, said Federal Reserve Chair Jerome Powell was likely to treat the data with caution, citing disruptions from the shutdown and the impact of tighter immigration policies on payroll figures.

Still, Shah said the sharp rise in unemployment could “trigger some creeping concern within the Fed.”

White House National Economic Council Director Kevin Hassett described the figures as consistent with longer-term trends, telling CNBC that the private sector remained on a “solid upward trajectory.”

Sector-wise, job gains in November were uneven. Healthcare led hiring, adding 46,000 jobs, including 11,000 in nursing and residential care facilities. Construction employment rose by 28,000, maintaining stability seen over the past year.

However, transportation and warehousing shed 18,000 jobs, while manufacturing employment declined by 5,000.

The report also showed an increase in long-term unemployment, with 1.9 million people jobless for more than six months, up from 1.8 million in September and 1.7 million a year earlier.

The data comes as US consumers and businesses face growing uncertainty. New electric vehicle and clean-energy policy rollbacks, reduced immigration, and corporate retrenchment — including recent shifts by major automakers away from aggressive electrification plans — have added to labour market volatility.

While hiring continues, analysts said the combination of rising unemployment, uneven sectoral growth and distorted data leaves policymakers with little clarity as they chart the path for interest rates in the months ahead.