Today we will take a close look at what is really happening right now in the US labor market, and why all of this might be the beginning of the next series of interest rate cuts by the FED.
In fact, things are not as bright as they seem.
****ADP REPORT****
Let’s start with the latest news, beginning with the ADP Report. According to the data released on Wednesday, the US private sector lost 32,000 jobs in November. And if that number doesn’t immediately resonate, just note that analysts were expecting an increase of 5,000 jobs. In other words… a complete reversal.
And where are the biggest losses concentrated? you might ask. Well, here they are:
(a) manufacturing
(b) professional services
(c) construction
(d) information services
ADP’s chief economist, Nela Richardson, stated that “hiring remains volatile as businesses adjust to cautious consumers and an uncertain macroeconomic environment.” Small businesses seem particularly vulnerable, as they account for most of the slowdown. This is a warning sign, since small firms employ a significant share of the US workforce.
NEW UNEMPLOYMENT CLAIMS
Last week, new unemployment claims fell by 27,000, landing at 191,000, the lowest level in the last three years.
“Isn’t that good news?”, you might say. Yes… but there are some fine-print details.
First, this number was heavily affected by seasonal factors such as Thanksgiving, as well as large drops in claims in California and Texas. Meaning, it does not necessarily reflect the real unemployment picture at the national level. Also, these declines may be temporary and carry no long-term significance.
Continuing claims, on the other hand, came in just under two million, while the insured unemployment rate held steady at 1.3 percent. It’s important to highlight that this rate has been moving steadily, which suggests that the labor market remains resilient, but may be standing at the edge of important shifts.
SURGE IN LAYOFFS
In November, more than 71,000 layoffs were announced. Yes, that’s fewer than the 153,000 recorded in October, but overall in 2025 we have already surpassed 1.17 million layoffs. That figure is up 54 percent from last year and is the highest since 2020, when the pandemic struck.
What are the main reasons for these layoffs?
Corporate restructurings, artificial intelligence — which has led to more than 54,000 layoffs — and tariffs, which account for about 8,000 layoffs so far this year.
A notable example is Verizon, which announced more than 13,000 cuts in November alone. Tech companies continue to trim their workforce, largely due to the adoption of AI technologies that render many positions unnecessary. This is not just a statistical observation — it signals a new era for the entire labor market.
WHAT ALL THIS MEANS
The US labor market is showing signs of weakness. Even though some indicators appear “positive,” the overall picture is concerning. Employers are becoming more cautious, and shrinking hiring combined with rising layoffs is creating a fragile balance.
And this… will force the FED to take action.
The logic is simple: when the economy slows, unemployment rises, and growth is at risk, the central bank eases interest rates to support the economy.
But keep in mind that even such moves take time to have an impact. The market may already be reacting positively to the anticipated cuts, with investors “betting” on a new stock rally in the coming months.
Posted Using INLEO