Latest US Jobs Report Lands Late and Offers Little Comfort

The United States (US) Bureau of Labor Statistics released a much-anticipated jobs report this week, after delays caused by a government shutdown. While the economy added 64 000 jobs in November, marginally better than expectations, the unemployment rate climbed to 4.6%, its highest level since 2021 and above forecasts.

Heather Long, chief economist at financial services company Navy Federal Credit Union, described the situation as a “jobs recession”.

Much of the hiring came from a single source. Nearly 70% of new jobs were in healthcare, a sector that continues to expand almost regardless of economic conditions because of America’s ageing population. Strip that out and job growth across the rest of the economy looks thin.

On average the US economy has added just over 55 000 jobs a month this year, putting it on track for its weakest labour market performance since 2020. October was particularly poor, with the economy shedding 105 000 jobs.

The concern is not just slowing growth, but the growing risk of stagflation (this is when inflation is fairly high but there is low economic growth). Inflation remains stubbornly above target, with consumer prices up 3% year-on-year in September, leaving the Federal Reserve, the American central bank, with limited options. Cutting interest rates too aggressively risks reigniting inflation, while holding rates higher for longer threatens to push an already softening labour market into outright decline.

At the same time, pressure is building on both sides of the economy. On the supply side, President Donald Trump’s tariff push is driving up costs, with business surveys showing activity growing at its slowest pace in six months, and input prices hitting a three-year high. On the demand side, consumers are pulling back. A CNBC survey found that 41% of Americans plan to spend less over the holiday season, with high prices cited as the main reason.

Policy uncertainty is compounding the problem. Trump has continued to publicly pressure the Fed to deliver deeper rate cuts, even after three cuts since September. With a new Fed chair due to take office in May, concerns are mounting that political pressure could undermine the central bank’s independence and worsen the risk of stagflation rather than relieve it.

For South Africa, a weakening US labour market tends to translate into softer global growth, increased market volatility, and less predictable capital flows into emerging markets.