Two Jobs Reports, One Big Question: Is The Labor Market Cracking?

For months, the U.S. labor market has been sending mixed signals, cooling in some places, holding firm in others, leaving investors unsure whether the slowdown is orderly or something more fragile is forming beneath the surface.

That uncertainty comes to a head this week.

On Tuesday, the Bureau of Labor Statistics will release November's Employment Situation report alongside long-overdue establishment survey data for October, bundling two months of labor-market signals into a single day after the government shutdown disrupted the normal data cycle.

While the November report will include both nonfarm payrolls and the unemployment rate, October will not include an official jobless rate, as the household survey was not collected during the shutdown and cannot be reconstructed.

October And November Jobs Data: What Economists, Traders Expect

The consensus among Wall Street experts tracked by TradingEconomics expects nonfarm payrolls to have risen by roughly 40,000 in November, a sharp slowdown from September's 119,000 gain and well below the pace typically associated with a healthy labor market.

The unemployment rate is projected to remain at 4.4%.

Traders, meanwhile, are a bit more hopeful. Betting markets imply better odds of a stronger print, though even there, enthusiasm fades quickly as job gains climb.

Odds tracked by Kalshi imply a median outcome closer to 60,000 jobs created in November. The platform assigns an 81% probability that payroll growth remained positive, but only a 25% chance that gains exceeded 100,000.

Odds of a print above 150,000 fall to just 11%, highlighting how skewed expectations have become toward a softer outcome.

Goldman Sachs expects payrolls to have risen by about 10,000 in October and 55,000 in November, slightly above consensus but still below recent averages.

According to Goldman’s economist Ronnie Walker, the headline payroll numbers are being distorted by government-related effects rather than underlying private-sector weakness.

Why This Matters For Markets

Markets are currently pricing only a modest probability of a January rate cut, especially after Fed Chair Jerome Powell recently stressed that policymakers are "well positioned" to wait and evaluate incoming data.

Tuesday's jobs report could put that patience to the test.

A modest downside miss — payroll growth slipping below expectations without a sharp deterioration in unemployment — would likely be enough to revive near-term easing bets.

In that scenario, interest-rate sensitive assets could benefit as Treasury yields drift lower.

That could be a positive scenario for the SPDR Gold Shares ETF (NYSE:GLD) amid expectations for lower interest rates and a likely weaker dollar.

A sharper slowdown, however, would tell a different story.

If payroll gains fade materially, or turn negative, or if the unemployment rate rises more decisively, the market's focus could shift from policy relief to economic risk.

In that case, even a surge in rate-cut expectations might struggle to offset concerns about consumer demand, corporate earnings, and labor-income growth, weighing on broader risk appetite. Assets like long-duration Treasury – tracked by the iShares 20+ Year Treasury Bond ETF (NASDAQ:TLT) – would likely be seen as the safe haven for investors.

The upside scenario carries its own trade-offs. A stronger-than-expected jobs print would suggest the labor market remains resilient heading into the holiday season, reinforcing the idea that consumers still have spending power.

That outcome could support cyclical sectors – like the Consumer Discretionary Select Sector SPDR Fund (NYSE:XLY) – bank stocks, and parts of tech tied to economic activity, even as it pushes Treasury yields higher and trims expectations for near-term Fed easing.

In short, when the jobs data hits Tuesday morning, investors won't just be parsing the headline number.

They'll be trying to answer a more consequential question: has the labor market cooled just enough to give the Fed flexibility — or far enough to raise concerns about what comes next?

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