Unemployment Rate Jumps To 4.6 Percent, Highest In Four Years

By Mish Shedlock of MishTalk

Tuesday, December 16, 2025 11:45 AM EST

Time, Time Management, Stopwatch, Industry, Economy

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Nonfarm payrolls were -105,000 in October and gained 64,000 in November.

Nonfarm Payrolls and Employment Levels, Thousands of Persons

Five Initial Thoughts

Nonfarm payrolls declined by 105,000 in October and rebounded by 64,000 in November.
The negative revision hit parade continues in November.
There is ho household survey data for October due to the government shutdown. This creates gaps in some of my charts.
There is no reason to believe any of these reports, but let’s discuss the information anyway.
The St. Louis Fed data that I use to create charts was seriously delayed this morning. So this report took extra time.

2025 Synopsis

Since January 2025, Employment (Household Survey) is -154,000.
Since January 2025, Nonfarm Payrolls (Establishment Survey) is +499,000.
Since January 2025, Fulltime Employment (Household Survey) is -1,726,000

All of this data is grossly distorted. I highly doubt nonfarm payrolls are nearly a half-million to the good in 2025.

And that -1.7 million decline in fulltime employment looks skewed in the other direction.

These distortions are compounded by what I believe to be nonsensical annual revisions in January.

Monthly Job Report Details

Nonfarm Payroll: +64,000 to 159,552,000 – Establishment Survey (October Fell by 105,000)
Civilian Non-institutional Population: N/A to 274,633,000
Civilian Labor Force: N/A to 171,571,000 – Household Survey
Participation Rate: N/A to 62.5% – Household Survey
Employment: N/A to 163,741,000 – Household Survey
Unemployment: N/A to 7,831,000 – Household Survey
Baseline Unemployment Rate: N/A to 4.6% – Household Survey (September Was 4.4%)
Not in Labor Force: N/A to 103,061,000 – Household Survey
U-6 unemployment: N/A to 8.7% – Household Survey (September Was 8.0%)

Permanently Discontinued

Every month, I used to publish two BLS-produced on job sector gains and month-over-month changes.

Today, I see this notice. BLS will no longer publish the Current Employment Statistics Highlights document. CES data is available in our online LABSTAT database.

I will investigate using the provided tool to provide the data.

Monthly Revision for November

The change in total nonfarm payroll employment for August was revised down by 22,000, from -4,000 to -26,000.
The change for September was revised down by 11,000, from +119,000 to +108,000.
With these revisions, employment in August and September combined is 33,000 lower than previously reported.
Due to the recent federal government shutdown, this is the first publication of October data and thus there are no revisions for October this month.

My Revision Comments from September

In July the BLS said oops. Employment in May and June was a combined 258,000 lower than previously reported (now revised lower again).
In August, the BLS said oops again. The BLS reported negative job growth for June.
The revision hit parade continues in September. July was revised down by 7,000, from +79,000 to +72,000, and the change for August was revised down by 26,000, from +22,000 to -4,000.

Part-Time Jobs

Involuntary Part-Time Work: N/A to 5,488,000 (up 909,000 from September)
Voluntary Part-Time Work: N/A to 23,126,000 (up 370,000 from September)
Total Full-Time Work: N/A to 134,170,000 (down 983,000 from September)
Total Part-Time Work: N/A to 29,486,000 (up 1,025,000 from September)
Multiple Job Holders: N/A to 9,301,000 (up 499,000 from September)

The above numbers never total correctly due to the way the BLS makes seasonal adjustments. I list them as reported.

Note that multiple job holders add to nonfarm payrolls but not the number of employed.

Hours and Wages

This data is frequently revised.

Average weekly hours of all private employees rose 0.1 hour to 34.3 hours.
Average weekly hours of all private service-providing employees was flat at 33.2 hours.
Average weekly hours of manufacturers rose 0.1 hour to 39.9 hours.

An overall decline or rise of a tenth of an hour does not sound line much, but with employment over 160 million, it’s more significant than it appears at first glance.

In a falling employment setup, hours of the remaining employees tend to rise, at least initially.

Hourly Earnings

This data is also frequently revised. Here are the numbers as reported this month.

Average Hourly Earnings of All Nonfarm Workers rose $0.05 to $36.86. A year ago the average wage was $35.61. That’s a gain of 3.5%.

Average hourly earnings of Production and Nonsupervisory Workers rose $0.11 to $31.76. A year ago the average wage was $30.58. That’s a gain of 3.9%.

Nonsense talk. The talking heads claim wages are rising faster than prices. They aren’t if you factor in homeowner’s insurance, property taxes, and food weighted properly.

Unemployment Rate

Unemployment rate seasonally adjusted, data from BLS, chart by Mish

Through July, the Unemployment Rate has been between 4.0 percent and 4.2 percent for 15 straight months.

That ended in August. Do we credit Biden, Trump, the Fed, or the BLS?

4.6 percent is the highest since the 4.7 percent reading for September 2021.

Alternative Measures of Unemployment

Table A-15 is where one can find a better approximation of the unemployment rate.

The official unemployment rate is 4.6 percent.
U-6 is much higher at 8.7 percent.

Both numbers would be way higher still, were it not for millions dropping out of the labor force over the past few years.

Some of those dropping out of the labor force retired because they wanted to retire. Some dropped out over Covid fears and never returned. Still others took advantage of a strong stock market and retired early.

The rest is disability fraud, forced retirement (need for Social Security income), and discouraged workers.

Birth Death Model

Starting January 2014, I dropped the Birth/Death Model charts from this report.

The birth-death model pertains to the birth and death of corporations not individuals except by implication.

For those who follow the numbers, I retain this caution: Do not subtract the reported Birth-Death number from the reported headline number. That approach is statistically invalid.

Household Survey vs. Payroll Survey

The payroll survey (sometimes called the establishment survey) is the headline jobs number. It is based on employer reporting.
The household survey is a phone survey conducted by the BLS. It measures employment, unemployment and other factors.

If you work one hour, you are employed. If you don’t have a job and fail to look for one, you are not considered unemployed, rather, you drop out of the labor force.

Looking for job openings on Jooble or Monster or in the want ads does not count as “looking for a job”. You need an actual interview or send out a resume.

These distortions artificially lower the unemployment rate, artificially boost full-time employment, and artificially increase the payroll jobs report every month.

The BLS payroll reports smack of oversampling large employers and undersampling small employers where jobs have been trending lower.

Final Thoughts

Five months ago I said “The BLS monthly data is total garbage. I do the best I can with BLS data.”

Four months ago, I said “The stench is so powerful that no one can pretend there is not a massive data collection, sampling problem at the BLS.”

Two months ago, I said “Not only is BLS sampling more than a bit questionable, but the birth-death model is proven garbage, and ICE raids are distorting immigrants’ ability and willingness to answer phone surveys by anyone working for the government.”

This month I note still more negative revisions.

Labor Market Recap

December 3, 2025 : Small Businesses Drop 120,000 Jobs in November, ADP Total Down 32,000

It’s another grim month according to ADP.

Change in Small, Medium, Large Employment Details

Small: -197,000

Medium: +275,000

Large: +1,012,000

December 4, 2025: Challenger Reports Employers Announced 71,321 Job Cuts in November

Announcements imply future, not immediate, layoffs and unemployment claims.

No Surprise

None of this is a surprise. I have been discussing, and predicting this all year.

The tariff impact on small businesses is starting to take a big toll on small businesses.

Unlike large employers, small businesses have fewer means of tariff avoidance and less ability to hold inventory or eat the tariffs.

December 5, 2025: Revelio Says Payrolls Decline by 9,000 the 5th Drop in 7 Months