Today’s Employment Report was long-awaited following a delay due to the federal government shutdown. The headline unemployment figure gained a lot of attention, rising from 4.4% to 4.6% – the highest level in over 4 years. However, underlying data shows the employment picture may be even more ominous than the unemployment rate depicts. A key data point in determining the true weakness of the labor market is the number of people employed part time for economic reasons. These are employees who would like to have full-time jobs but have had their hours cut due to insufficient work, slack business conditions, or they could only find part-time work. This figure typically shoots up at the start of recessions, and a rapid rise is a historically reliable warning of trouble for the economy. In the latest release, the number of people employed part time for economic reasons skyrocketed 20% from the previous report in September.
This would usually be a significant recession warning flag. However, the current release has some gray area, as the government shutdown might have skewed the number of workers that fell into the “part time for economic reasons” category. As a result, it will be important to watch the December Jobs Report (out on January 9th) for either a continuation in trend indicating that this figure was accurate, or a reversal telling us that this report was, in fact, a fluke.
Bottom line, this release shows recessionary stress. We’ll reveal the rest of the story, and what this foreboding report means for the Fed’s battle going into 2026, in the December Issue of InvesTech Research – out this Friday!
NOTE: The Employment Report is comprised of two surveys, the Household Survey from which the unemployment rate is derived, and the Establishment Survey which produces the nonfarm payrolls figures. No data for the Household survey will be released for October 2025 as it was not collected. However, the Establishment Survey data for October was collected and is included in this latest release. These adjustments in data availability is due to the government shutdown from October 1 to November 12.