The labor market is not going to give any straight answers anytime soon
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Investors looking for a straight answer on the health of the labor market will have to keep waiting or once again make sense of mixed signals.
That’s especially true as this December morning marks another first Friday of the month without government jobs data — the best labor market gauge we have.
In the meantime, investors and everyone else have to make do with next-best approximations. And by those measures, hints of calm coexist with warning signs as the labor market grinds through DOGE cuts, restructurings, and what the largest corporations see as the dawn of the AI era.
Claims for unemployment insurance dropped to a three-year low, according a new report from the Labor Department released on Thursday, bolstering the idea that the labor market remains resilient despite a host of challenges.
But ’tis the season for statistical noise.
Initial claims are subject to big swings this time of year, noted Nancy Vanden Houten, lead economist at Oxford Economics, so observers don’t need to read too much into one week’s worth of numbers.
“Still, initial claims have remained in a range consistent with a relatively low pace of job losses despite recent layoff announcements,” Vanden Houten wrote in a note Thursday.
Meanwhile, she said, continued claims remain at levels consistent with the weak hiring that has defined the current labor market.
Other private sources of employment data show greater trepidation.
Employers announced more than 70,000 layoffs last month, according to a report from the global outplacement firm Challenger, Gray & Christmas, released Thursday. The number of cuts was up 24% from the planned layoffs announced in November 2024, and reached the highest total for the month since 2022.
“Layoff plans fell last month, certainly a positive sign. That said, job cuts in November have risen above 70,000 only twice since 2008: in 2022 and in 2008,” Andy Challenger, workplace expert and chief revenue officer for Challenger, Gray & Christmas, said in the report.
Earlier this week, private payroll processor ADP found that the economy unexpectedly shed 32,000 private-sector positions last month, with losses concentrated among small- and medium-size businesses.
Squaring this with the lower claims may be tricky. Or it may be explainable, as our Head of News Myles Udland tweeted: White-collar employees may wait longer or never file for unemployment insurance.
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