What the Long-Awaited Jobs Data Really Revealed

At long last, after weeks of government shutdown-induced delay, we have one-point-five new US Employment Situation Reports—the Establishment Survey (nonfarm payrolls) for October and November, with November’s Household Survey (unemployment rate) rolled in. And because they showed the unemployment rate rising in November and total nonfarm payrolls dropping in the two-month window, headlines are gleaning very bad things indeed about the economy. We suggest tuning them down. Employment data don’t predict the economy or stocks, but this report was better than the top-line numbers imply.

Yes, those top-line figures are meh. The unemployment rate rose from September’s 4.4% to 4.6% in November (the shutdown erased October’s read), extending this year’s gradual drift higher.^[i] The U-6 unemployment rate, which includes folks working part-time for economic reasons and marginally attached to the labor force, jumped from 8.0% to 8.7% in that two-month span.^[ii] Now, these weren’t all bad news, as the main unemployment rate rose primarily because the labor force rose more than the number of employed people, meaning more people sought work. But the number of people working part-time for economic reasons rose, too, so the picture is kind of mixed and meh.

As for nonfarm payrolls, those fell by -105,000 in October, then rose by 64,000 in November—a cumulative loss over the two months.^[iii] But this stems entirely from a drop in government payrolls in October. Those fell by -157,000, and it was mostly a technicality. Back in the spring, when the Department of Government Efficiency was on its mission to reduce federal headcount, a lot of folks took deferred resignation packages that bought them six months’ worth of salary. Those ended September 30, taking these people off the government payrolls in October. Meanwhile, private-sector payrolls rose by 52,000.^[iv] Private sector payroll growth grew in November, too, accelerating a smidge to a 69,000 increase.^[v] Interestingly, October’s rise happened as layoffs reached fever pitch, per outplacement firm Challenger, Gray and Christmas. While some companies are indeed cutting back, hiring elsewhere offset it.

So this doesn’t look to us like a jobs report confirming a troubled US economy … which is about all a bad jobs report would be able to do, considering employment data are late-lagging indicators. Growth creates jobs, not the other way around. And, well, it looks to us like growth earlier this year is still creating jobs in America’s vast private sector. And as much as headlines gripe that this is happening in the wrong sectors, whatever that even means, because healthcare and social assistance was the main job creation engine, that is kind of beside the point. Markets are well aware of industry-specific trends, and job growth has no bearing on returns.

Consider: Healthcare and social assistance has been the main source of private sector payroll growth all year. Yet stocks are rallying across the board. All 11 S&P 500 sectors are up year to date, and Health Care is lagging the broader index. Tech, Communication Services and Industrials—three employment concern hotspots—are all leading. The market seems to be telling you as loudly as it can that it is a cold-hearted beast that just doesn’t care much about payrolls.

The market is ruthlessly efficient at dealing with widely known information and climbs a wall of worry as it weighs how reality is likely to shape up versus expectations over the next 3 – 30 months. Economic fundamentals matter to this process. So do political drivers and sentiment. The market’s day job is balancing all of these things, and it has told us the balance is positive since the spring’s tariff panic-induced correction ended in April. Maybe, just maybe, it is time to stop listening to those who warn weak jobs growth signals trouble and start trusting the market.

None of this tells us what stocks will do in 2026, so don’t take this to be a forecast. We will get there, but that time isn’t now. However, whatever the market does, it won’t hinge on employment trends. Those will generally follow whatever stocks do, at a late lag.