Mounting Evidence of a Weaker Job Market
Week of December 1, 2025 in Review
More labor sector data is pointing to growing softness in the job market, while the latest inflation figures came in largely as expected. Here’s a look at the key highlights.
- Small Businesses Drive a Sharp Drop in Private Payrolls
- Additional Indicators Signal a Softer Job Market
- PCE Inflation Data Points to Possible Rate Cut
- Family Hack of the Week
- What to Look for This Week
- Technical Picture
Small Businesses Drive a Sharp Drop in Private Payrolls
The private sector shed 32,000 jobs in November, according to ADP – well below expectations. Small businesses cut 120,000 jobs, while medium-sized firms added 51,000 and large employers added 39,000.
Six of ten industries lost jobs. Education and health services led gains with 33,000, and leisure and hospitality added 13,000, likely reflecting seasonal trends.
Wage growth still favors job switchers, up 6.3% year over year versus 4.4% for job stayers. The gap has narrowed to 1.9%, the smallest in five years, signaling less competitive hiring.
What’s the bottom line? The private sector has lost 17,000 jobs over the past four months. ADP Chief Economist Dr. Nela Richardson described hiring as “choppy,” citing cautious consumers, an uncertain economy, and broad slowing led by small businesses.
This report carries added weight because official government employment data for October and November has been delayed by the federal shutdown and won’t arrive until after the Fed’s December 10 meeting.
The Fed is balancing above-target inflation against slowing momentum. Weak labor data increases the odds of a rate cut, but officials remain split, and Chair Jerome Powell has cautioned there’s “no risk-free path.”
Quick refresher: When the Fed adjusts interest rates, it changes the Federal Funds Rate – the short-term rate banks charge each other. This doesn’t directly set mortgage rates, but it strongly influences them along with broader economic conditions.
Additional Indicators Signal a Softer Job Market
Initial jobless claims fell by 27,000 to 191,000, though the decline was likely influenced by Thanksgiving, since many people delay filing due to travel or holiday plans. Continuing claims also dipped slightly to 1.939 million, but they have stayed above 1.9 million since mid-May, signaling ongoing strain for those already unemployed.
Challenger, Gray & Christmas reported 71,000 job cut announcements in November, a 24% increase from a year ago. Restructuring was the primary driver last month, while DOGE impacts remain the leading cause of job cuts for the year. Employers have announced 1.17 million cuts year-to-date – only the sixth time since 1993 that totals through November have exceeded 1.1 million.
Hiring plans are also weakening. Year-to-date hiring announcements are at their lowest level since 2010, and seasonal hiring plans are the weakest since 2012.
What’s the bottom line? Persistently elevated claims, rising job cuts, and weak hiring plans point to a labor market that continues to lose momentum.
PCE Inflation Data Points to Possible Rate Cut
The government released the delayed Personal Consumption Expenditures (PCE) report for September, coming mostly in line with expectations. Overall inflation rose 0.3% for the month, nudging the annual rate from 2.7% to 2.8%.
Core PCE – the Fed’s preferred measure, which excludes food and energy – rose 0.2% in September and edged down slightly year-over-year from 2.9% to 2.8%, just a touch better than expected.
What’s the bottom line? Inflation in line with forecasts bolsters the case for a Fed rate cut amid slowing job growth.
Family Hack of the Week
These Walnut Brownies from Food Network are perfect for National Brownie Day on December 8 or any time you crave something chocolatey. Makes about 20 large brownies.
Preheat the oven to 350 degrees Fahrenheit and butter and flour a 12×18-inch baking dish. In a heatproof bowl over simmering water, melt 1 pound unsalted butter, 1 pound semisweet chocolate chips, and 6 ounces unsweetened chocolate. Stir until smooth, then let cool slightly.
In a large bowl, gently mix 6 extra-large eggs, 3 tablespoons instant coffee granules, 2 tablespoons vanilla, and 2 1/4 cups sugar. Stir in the warm chocolate mixture, then let it cool to room temperature.
In a separate bowl, sift together 1 cup flour, 1 tablespoon baking powder, and 1 teaspoon salt, then fold into the chocolate batter. Toss 3 cups chopped walnuts and 12 ounces chocolate chips with 1/4 cup flour to coat, and stir them into the batter. Pour into the prepared pan.
Bake for 20 minutes, then tap the pan lightly against the oven rack to release air bubbles. Continue baking for about 15 more minutes, until a toothpick inserted in the center comes out clean. Cool completely, then refrigerate before slicing.
What to Look for This Week
The Federal Reserve begins its two-day policy meeting on Tuesday, with their interest-rate decision and press conference set for Wednesday afternoon. Also on Tuesday, the government will release its delayed JOLTS reports, providing job openings data for September and October. The latest jobless claims data will follow on Thursday.
Technical Picture
Mortgage Bonds ended last week trading in a range between support at the 25-day and 50-day Moving Averages and resistance at 101.32. The 10-year Treasury yield broke above resistance at the 4.126% Fibonacci level and now has room to move higher before reaching the next ceiling at the 100-day Moving Average.
