Job Market Trends Insights

November Jobs Report: Some Glitter but Mostly Gloom ‼️ The November jobs report, including October data delayed by the government shutdown, sent mixed signals but leaned weak. However, with many complicating factors at play, investors looking for clues on whether the Federal Reserve will gift another rate cut in January may have to wait until the new year. ⬇️In the details⬇️ ➡️Weak headline growth but less concerning details: The U.S. economy lost 41k jobs across October (‑105k) and November (+64k), bringing the three‑month moving average down to 22k from 51k in September. However, October weakness was entirely driven by a 162k decline in federal government payrolls. Private payrolls delivered a better‑than‑expected result, rising 121k over the two‑month period. The private sector added 75k jobs, on average, in the three months ended November versus 57k in September. ➡️Government employment plummets due to deferred resignation program: As expected, federal government employment was a huge drag. The sector shed 162k jobs in October and another 6k in November as employees who accepted the Trump Administration’s deferred resignation program rolled off payrolls. Elsewhere, growth was sluggish at best. On net, goods‑producing sectors added 10k jobs, although this was entirely driven by a November rise in construction (+28k). Manufacturing employment fell for a seventh straight month. Service sectors added 111k jobs over the two‑month span, but health care and social assistance continued to shoulder the load (+128k). ➡️Unemployment rate reaches four‑year high: The unemployment rate rose 12bps from September to 4.6% (4.56% unrounded) in November, putting it above the median FOMC forecast from the December SEP. But with the government shutdown and Thanksgiving holiday complicating the collection process, the survey response rate was seasonally low at 64%, and the BLS noted that “November estimates are associated with slightly higher than usual standard errors.” These figures could be revised in the months ahead, but importantly, the unemployment rate remains on an upward trend. ➡️ Wage growth slows to four‑year low: Private wages rose just 0.1% m/m (cons. 0.3%) and 3.5% y/y, the slowest annual increase since May 2021. With wage growth trending lower and inflation higher, the streak of positive real wage gains could be at risk next year. Market expectations for Fed rate cuts changed little despite the dramatic headlines, and the probability of a January rate cut has held around 25%. Elevated uncertainty may have caused investors to have low conviction in their forecasts, while mixed details also likely kept markets from shifting posture. Stocks, however, sold off sharply in early trading. With two more CPI reports and another jobs report due out ahead of the Fed’s next meeting, the jury is still out on a January rate cut. That said, a continued rise in the unemployment rate could warrant more policy easing than expected in 2026.

We just published the latest edition of our Recruiting Benchmarks Report. It looks at 165 million applicants, 15 million candidates, and 1.2 million hires over the past 4 years. After digging through the data, here's the story I am seeing: the market is starting to stabilize, but recruiting teams are working harder than ever. Another gradual year of recovery, but uneven. → Overall hiring is up 8.3% year over year. But we're still 30% below 2021 levels.  → Tech companies are still down 40% from their peak. → Here's what stood out: smaller companies under 500 employees are recovering the fastest. They're only ~12% below 2021 levels. If you're at a startup or mid-market company feeling the pressure to hire, you're not imagining it. You really are moving faster than the rest of the market. Teams got leaner and stayed that way. → The average recruiting team size is down 14% compared to 2021.  → The average recruiter now manages 40% more job openings and nearly 2x more applications compared to 2021 Hiring is more intensive and selective. → Interviews per hire are up 33% overall If you're job hunting right now, the data explains why it feels so hard. → Only 0.5% of applicants get hired. One person out of every 200. For context: it's literally harder to land a tech job right now than it is to get into Harvard. → And candidates feel it. Offer acceptance rates are holding at 82% because people have fewer options. When the odds are against you, and you finally get an offer, you probably take it. Your best candidates are already in your database. → 46% of sourced hires in 2025 came from people already in your CRM or ATS. That was only 26% in 2021. → For Engineering & Data Science, it's 48%. For Design, 57%. → Your best pipeline isn't on LinkedIn. It's already sitting in your database. That’s why AI is all the rage in recruiting these days. It's the only way teams can keep up. → When you're processing twice as many applications with fewer people, you find a way to prioritize or you drown.  → When half your best hires are buried in your database, you need AI to surface them.  → When every role requires 33% more interviews, you need AI to make the process more efficient. Full report (with deeper cuts by company size, industry, department and location) in comments

There has not been a lot of evidence so far that AI is actually impacting jobs. But this paper finds early signs that this may be starting, showing a decrease in entry-level job openings relative to experienced ones concentrated in the jobs where AI mostly automates, not augments, work (like coding). Other factors could explain the pattern, but this does fit predictions. It also suggests that AI will have uneven effects, impacting new employees first. Plus, how AI is used is important for understanding its impact. There are large implications for training, careers & industry growth

The typical read on falling job openings is wrong. ➡️ During the pandemic jobs needed were not matching job offered. So vacancy rates/ job openings were higher during pandemic (green cluster) than pre pandemic (red cluster), for the same unemployment rate. ➡️ Coming out of the pandemic (yellow and pink clusters) this mismatch started unwinding. So vacancy fell while unemployment rate and layoffs still stayed low. Bottom line is: the fall in vacancies/ job openings does NOT have the same signal effect about growth as before, because of pandemic distortion. And the tick up in unemployment rate also does NOT have the same signal effect, because of positive supply shock from immigration. Context is everything. #BeveridgeCurve #MegaForces #SlowdownNotRecession

The Labor Market is not getting looser, yet. Although payroll gains have downshifted, the labor market has yet to exhibit the typical signs of easing. Our Labor Market Tightness Index remains stuck in a narrow band, and the unemployment rate is treading water rather than drifting higher. In other words, the mechanical link between slower hiring and greater slack has not asserted itself, at least not so far. Immigration policy is a central reason. A pullback in net inflows is already damping overall population growth and therefore consumer demand, but the larger effect shows up on the supply side. Undocumented immigrants are disproportionately of prime working age, and stepped-up deportation efforts have pushed many to stay in the country yet avoid formal employment. This hidden labor supply, once a buffer for employers, has receded sharply. Meanwhile, the sources of weaker labor demand and weaker labor supply are misaligned. Artificial-intelligence adoption is trimming hiring plans mostly in office and other white-collar occupations, whereas the supply squeeze is concentrated in blue-collar and manual-service roles where undocumented workers have long been over-represented. Those cross-currents are unlikely to resolve quickly. The most plausible near-term outcome is a bifurcated market: looser conditions and softer wage pressure for knowledge workers, alongside persistent, or even intensifying, tightness for employers seeking construction crews, warehouse staff, and other hands-on talent. #labormarkets #laborshortages #recruitment #immigration

Behind every opportunity is a relationship, and behind every relationship is a conversation. Networking is about building real connections that last and have the potential to help you find your next opportunity. Data shared by the University of Maryland’s Department of Economics indicates you won’t find 70% of available jobs on any site that posts open positions. Those positions are usually found on a company’s internal network, often by referral. In other words, relationships can make the difference between finding a job or not. That’s no surprise to me. Throughout my journey, from engineer to investor, relationships have been a constant driver of growth. Mentors, colleagues and peers have not only opened doors, but also challenged my thinking, sharpened my skills and inspired my vision. Here’s what I have learned: - Be curious: Ask questions that show you care about people’s stories. - Be intentional: Connect with purpose, not just for your own gain. - Be consistent: Follow up, follow through and add value where you can. Networking isn’t a one-time event. It requires maintaining ongoing relationships rooted in trust and genuine interest in other people’s lives. Whether you’re just starting out on your professional journey or deep into your field, relationships are what power careers.

Continuing Claims Reach New Post-Pandemic High   The latest rise in continuing jobless claims stands in stark contrast to what the unemployment rate suggests about the labor market. Claims data now point to rising labor market slack, as business conditions grow increasingly uncertain amid shifting trade, fiscal, and monetary policies.   It’s now harder for unemployed workers to find jobs than at any point in the past three years. With business confidence still subdued compared to earlier this year, companies are pulling back on hiring—particularly for entry-level positions.   A much stricter immigration policy has placed a ceiling on the unemployment rate by limiting labor supply. But that doesn’t mean jobless workers can easily step in to fill open roles, as mismatches in skills or location remain key barriers.   The claims data align more closely with last week’s increase of just 74,000 in private payrolls—far below what the topline jobs number suggested.   While the unemployment rate remains a key labor market gauge for the Federal Reserve, this may be a moment when that single metric is no longer sufficient to guide its decision on interest rates.

The more I talk to businesspeople, the more I hear phrases such as “things are on pause” due to all the economic uncertainty, stemming primarily from how the Trump Administration has implemented tariff policy. Two charts below show this concerning the labor market using data from JOLTS program. Thoughts: •The top chart shows the hire rate, which as of August had fallen to just 3.5% on a seasonally adjusted rate. This is an anemically low level. The last time the hire rate was consistently this low was in 2010 in the immediate aftermath of the global financial crisis. In contrast, just 4 years ago, it was at the highest level in two decades. The hire rate today is well below where it was in 2017-2019. •The bottom chart shows the layoff and discharge rate, which is below 2017-2019 levels. •The combination of very low hiring rates coupled with ongoing historically low rates of layoffs and discharges isn’t something we have seen in the history of the JOLTS data. However, this finding follows naturally from concepts in real options theory that elevated uncertainty encourages firms to delay hard to reverse actions. As there are substantial fixed costs with both hiring and firing workers, we would expect layoffs and hires to be low when economic policy uncertainty is high. Implication: once the dust settles, many years from now, I expect we will look back on the 2025 tariff shock as having more detrimental effects due to uncertainty (what economists call second-moment effects) compared to the sentiment attached to the tariffs themselves (what economists call first-moment effects). The ongoing questions about what tariff rates with China will ultimately settle in at is case in point. #supplychain #economics #markets #transportation #supplychainmanagement

We think that persistent structural tightness in the labor market has led to some combination of higher wages as well as worker shortages across multiple industries on a sustained basis, impacting corporate margins and growth rates. This scenario has played out faster and more furiously than many global CEOs and investors were expecting over the last 18 months. It has also been a conundrum for central bankers, and especially for the Federal Reserve. Work done by my colleague David McNellis suggests that on top of the U.S.’s demographic challenges, fully four million U.S. workers left the workforce during the pandemic, we believe. Moreover, we are structurally still three percent below pre-pandemic trends of employment in one of the tightest labor markets since the 1970s. Against this backdrop, we continue to think that lower unemployment rates will be a defining feature of this cycle, as de-globalization, more limited immigration, and lower participation rates make it harder to find workers at a time when demographic growth is also slowing.   Our bottom line: We at KKR suggest engaging employees at the portfolio company level as well as better understanding the demographics across countries and regions that are driving economic trends and opportunities behind which to invest. Learn more in our Eye of the Tiger piece, which digs into these #macroeconomic trends. https://go.kkr.com/456mrbN

A welcome rebound The November Jobs report added further evidence of general economic health, reflecting a labor market that is slowing but not nearly grinding to a halt. After a dismal October payroll report complicated by strikes and weather, hiring rebounded by a better-than-expected 227K jobs with positive revisions adding 56K to the last two months combined. 💡 The Fed was widely expected to cut rates by 0.25% later this month, and this report cements that expectation further.   Key takeaways from the report: ➡️   Private sector employment accounted for 85% of job growth this month, driven by strong hiring in health care and social assistance (72K) and leisure and hospitality (53K)—two sectors accounting for roughly 1/3rd of job openings. Retail trade and transportation/utilities shed some jobs, while manufacturing hiring recovered roughly half of last month’s job losses (which included Boeing strike impacts). ➡️   Wages were stable, growing 0.4% on the month and 4% from a year ago. Wage growth continues to outpace inflation, contributing to further gains in household purchasing power. ➡️   Mixed signals from the two surveys do cast some fog on the overall signal here. In the survey of households, labor force participation ticked down and unemployment rose by 161K, a very different picture from the establishment survey’s growth of 227K. This kind of discrepancy is, unfortunately, a new norm. Since last December, household employment shows a decline of 42K, compared to payroll growth of nearly 2 million. Over time, improved data should narrow this gap, and in the meantime, we continue to lean on the “mosaic” of labor market indicators. ➡️   Unemployment may be back at its July level, but it’s not stoking the same fears. When unemployment hit 4.2% in July, it rang alarm bells on recession and inclined the Fed towards a jumbo 50bp cut. Since then, data has shown above-trend GDP growth, jobless claims remain muted, job openings are elevated and ISM purchasing manager surveys suggest employment is modestly improving. ➡️   Still, the uptick in the U-6 unemployment rate bears watching, as an increase in underemployed and discouraged workers could signal underlying labor market strain.   Altogether, stability in wages and the uptick in unemployment tilts the scales further towards a December cut, which markets have upgraded to a ~90% probability following this report. We will watch for progress in CPI after a recent stalling out in disinflation next week, but the bar seems high for a pause. More broadly, despite a shallower easing cycle, above-trend growth, real wage gains, and earnings breadth should provide support for a continued equity rally into the new year.