Thoughts

December 05, 2025 | 13:57

Still a Low-Hire, Low-Fire World for U.S. Workers

Economist

Senior Economist and Director
Economics

Sal Guatieri is a Senior Economist and Director at BMO Capital Markets, with over two decades experience as a ma... (Read more)

Sal Guatieri

Senior Economist and Director
Economics

Sal Guatieri is a Senior Economist and Director at BMO Capital Markets, with over two decades experience as a ma... (Read more)

We are still more than a week away from the long-awaited official November (and October) jobs report, but based on a stream of private-sector sources and some government figures, hiring remains weak and the jobless rate likely continues to grind higher.

ADP private-sector payrolls fell by 32,000 in November, marking the third decline in four months. This was led by a 120,000 plunge among small businesses. While large firms continued to provide a partial offset to the layoffs at small shops, the latter are far more numerous and tend to generate more jobs over time. Unfortunately, they are likely having a harder time adjusting to uncertain trade policies and immigration restrictions. Also disappointing was Revelio Labs’ estimate of nonfarm payrolls, which contracted by 9,000 in November. And, both of the ISM job metrics remained in negative territory in the month.

Still, some reports suggest labour market conditions might not be worsening. Initial jobless claims fell by 27,000 last week to a more than three-year low of 191,000. While the slide was likely due to the Thanksgiving holiday, the four-week moving average has been drifting down toward its quarter-century average. In addition, after spiking in October, Challenger layoff announcements returned to their 25-year mean last month (Chart 1). Neither economic conditions nor artificial intelligence were cited as main reasons for the 71,321 layoffs. Rather, they were led by restructuring efforts (including 13,000 at Verizon), which tend to be one-time drivers.

All told, the data suggest that official private-sector payroll gains likely remained under 100,000 in November (as in the five months to September) and may even have turned negative (as in June). The unemployment rate should either stay close to September’s level of 4.44%, as suggested by the Chicago Fed’s real-time tally for November (held down by immigration restrictions); or, more likely, edge higher due to weak labour demand. In either case, the rate would be above the FOMC’s median estimate of neutral (4.2%), pointing to ebbing inflation pressures. If policymakers are thinking along these lines, they will pull the easing trigger again next week, even if inflation is currently above target.