Labor Market Resilience and Shifting Sectors: Key Takeaways from Delayed Jobs Data, Home Sales Surge, and Rate Cut Hopes

Weekly Economic Review: Nov. 21, 2025

This week’s economic data includes: (1) job creation and employment situation for

September, (2) existing home sales for October, and (3) weekly initial jobless and

continuing claims

Key Summary:

Despite a delayed release and canceled October report, September’s data shows a resilient labor market with stronger-than-expected job gains in a few concentrated service sectors, rising unemployment to 4.4%, and steady wage growth.

The Bureau of Labor Statistics (BLS) released its September 2025 jobs report on November 20, following a 43-day government shutdown that delayed the original October 3 release. Despite these disruptions, September showed stronger-than-expected job growth, with employers adding 119,000 jobs compared to forecasts of 53,000, reversing August’s revised loss and lifting the three-month average to 62,000.

Private sector employment rose by 97,000, while government added 22,000 jobs, driven by state and local hiring. Service industries led gains, particularly healthcare and social assistance (+57,100) and leisure and hospitality (+47,000), though professional and business services lost 20,000 jobs. Goods-producing sectors posted a modest rebound of 10,000 jobs, largely from nonresidential construction tied to AI data center projects. Overall, job growth remains concentrated in lower-skill service roles, signaling a labor market increasingly reliant on these sectors.

The unemployment rate climbed to 4.4%, its highest level since October 2021, as the labor force expanded by 470,000 and unemployment rose by 219,000. Participation edged up to 62.4%, the strongest since May, while long-term unemployment declined slightly. Unemployment for the 20–24 age group remained at 9.2%, reflecting weak demand for entry-level positions amid increasing AI adoption. Meanwhile, the employment diffusion index rose to 55.6%, up from its previous sub-50% level, which typically signals potential recession risks.

Other indicators were mixed: layoffs increased by 88,000, permanent job losers reached 2.69 million, and temporary help services continued a five-month decline. Part-time employment for economic reasons fell, while multiple jobholding rose slightly. Wage growth remained steady at 0.2% month-over-month and 3.8% year-over-year, with average weekly hours unchanged at 34.2. These figures point to continued support for moderate consumer spending, and a labor market showing resilience but facing structural shifts and concentration risks.

Existing home sales in October reached their highest level since February, supported by easing mortgage rates and modest inventory gains, signaling renewed momentum in a housing market that had been stagnant for most of the year.

Existing home sales rose 1.2% in October to an annualized rate of 4.10 million units, the highest level since February, supported by easing mortgage rates. The increase exceeded expectations and came despite the federal government’s shutdown, signaling renewed momentum in a market that had hovered near 4 million units for most of the year. Regionally, sales were mixed with gains in the Midwest and South offset by a decline in the West, while year-over-year growth slowed nationally compared to September.

Single-family home sales edged higher, while condo and co-op transactions posted a stronger monthly gain. The median existing home price increased 2.1% year-over-year to $415,200, marking the 28th consecutive month of annual price growth, though at a slower pace than earlier in the year. Inventory remains tight but improved slightly, with unsold homes at 1.52 million units—still below pre-pandemic levels but up nearly 11% from last year. Months’ supply rose to 4.4, approaching a more balanced market range.

Buyer dynamics showed first-time buyers gaining share, while all-cash purchases and investor activity moderated. Homes stayed on the market longer, averaging 34 days, and distressed sales remained minimal. Mortgage rates continued to ease, with the average 30-year fixed rate at 6.25% in October and holding near that level into late November, providing some relief for buyers amid affordability challenges.

Initial jobless claims signal ongoing labor market stability, but the steady rise in continuing claims highlights growing challenges in finding new jobs and points to a weakening hiring environment.

Initial jobless claims fell by 8,000 to 220,000 for the week ending November 15, coming in below expectations and signaling continued labor market stability despite recent layoff announcements. The four-week moving average edged down to 224,250, while continuing claims rose to 1.974 million—the highest level since November 2021 – indicating increasing difficulty in finding new jobs and a softer hiring environment. Overall, the data reflects a labor market characterized by low hiring and low firing.

Equity markets fell on tech and AI valuation concerns while Treasury yields dropped on dovish Fed signals and risk-off sentiment, as incomplete data and uncertainty keep the Fed cautious for December despite markets pricing in multiple future rate cuts.

Equity markets ended the week lower after a volatile stretch, with major indexes posting notable declines. The S&P 500 and Nasdaq fell sharply, extending November losses and marking Nasdaq’s longest weekly losing streak since March. Selling pressure stemmed from concerns over lofty valuations in technology and AI stocks, slowing economic signals, and profit-taking. Nvidia’s strong earnings briefly fueled a rally midweek, but a broad selloff followed on Thursday. Sentiment improved Friday after dovish comments from New York Fed President John Williams raised hopes for a December rate cut. Technology stocks led losses, while healthcare and communication services posted gains.

Treasury yields declined across the curve as investors sought safety amid equity volatility and reacted to expectations of policy easing. The drop was driven by dovish Fed commentary, risk-off positioning, and the absence of key economic data delayed by the recent government shutdown. Markets now see a higher probability of a December rate cut—though still close to a coin toss—and have priced in multiple cuts through 2026 and 2027, which would lower the federal funds rate upper bound from 4.00% to 3.00%.

Despite stronger September payrolls and a still-low unemployment rate, the Fed faces uncertainty in setting policy amid incomplete data and mixed signals. The uptick in unemployment reflects higher participation rather than weak job creation, and with no CPI report and November jobs data arriving after the December FOMC meeting, the Fed is likely to remain cautious. As Chair Powell noted, “if you drive in the fog, you need to slow down,” underscoring a measured approach to future rate decisions.

Let’s take a closer look at this week’s data releases, including September job creation and employment figures, existing home sales, and weekly initial and continuing jobless claims.

Job Creation and Employment Situation – September Update:

Delayed Release and October Report Cancellation

The Bureau of Labor Statistics (BLS) released its September 2025 jobs report last Thursday, November 20, 48 days later than the originally scheduled date of October 3. The delay resulted from a 43-day government shutdown that began on October 1. The October jobs report had been canceled because the shutdown prevented collection of household survey data needed to calculate unemployment and related statistics. However, the nonfarm payrolls component—based on the establishment survey—will be combined with the November report, which is scheduled for release on December 16 after the December 9–10 FOMC meeting.

Overall Job Growth

The U.S. labor market posted solid job growth in September. Employers added 119,000 jobs, well above expectations of 53,000 and reversing August’s revised 4,000 loss (down from a 22,000 gain). July was revised down by 7,000 to 72,000. Combined revisions for July and August show 33,000 fewer jobs than previously reported. The three-month moving average rose to 62,000 from 18,000 (revised down from 29,000) in August.

Sector Performance

Private sector employment increased by 97,000, exceeding the forecast of 66,000 and up from 18,000 in August (revised down from 38,000), while government employment rose by 22,000, driven by a 25,000 gain in state and local government jobs, partially offset by a 3,000 decline in federal jobs – the eighth consecutive monthly decline, totaling a loss of 97,000 federal jobs since January.

Within the private sector, the service industry added 87,000 jobs, following a 50,000 gain in August. The increase was primarily led by healthcare and social assistance (+57,100 vs. +40,200 prior) and leisure and hospitality (+47,000 vs. +32,000 prior). Job gains continued to be concentrated in these two service sectors. However, these increases in lower-skill roles were offset by a loss in higher-skill sectors, with professional and business services down 20,000 (vs. -17,000 prior).

The goods-producing sector added 10,000 jobs after four consecutive months of contraction. Surprisingly, this was primarily driven by construction (+19,000 vs. -14,000 prior), given the slow residential housing sector and restrictive immigration policy. This large gain in September mostly resulted from nonresidential construction, particularly specialty trade contractors, likely reflecting strong demand from AI data center construction. Overall, the data reflects a labor market increasingly dependent on service-sector growth.

Employment Diffusion Index

The employment diffusion index, which measures whether job growth is broadly distributed across industries or concentrated in a few sectors, rose to 55.6% in September from 49.0% in August, showing less concentration in limited sectors such as healthcare and social assistance. Prior to September, the index was below 50% for five consecutive months, indicating that job losses were more widespread while gains were concentrated in a few areas. This persistent trend of sub-50% readings could reflect a broader slowdown in economic activity, raising the likelihood of an economic contraction or recession. Historically, the diffusion index tends to fall below 50% as the business cycle enters a downturn.

Unemployment and Labor Force Participation

The unemployment rate rose to 4.4% in September from 4.3% in August, exceeding market expectations and marking the highest level since October 2021. This increase was driven by a 470,000 expansion in the labor force, representing 0.28% month-over-month growth, and a 219,000 rise in unemployment, a 2.97% increase from the prior month. A total of 251,000 individuals gained employment during the month.

The age group 20–24, typically in transition from education to employment, continued to have relatively high unemployment of 9.2% in September, unchanged from August, due mainly to low demand for entry-level positions amid rising integration of artificial intelligence.

The labor force participation rate edged up to 62.4%, slightly above market expectations and August’s 62.3%, as well as the highest level since May. Long-term unemployment declined by 116,000, with 1.81 million individuals unemployed for 27 weeks or more. The average duration of unemployment slightly decreased to 24.1 weeks, down from 24.5 weeks in August.

Layoffs and Job Dynamics

Layoffs rose by 88,000 in September, primarily due to 139,000 permanent layoffs, partially offset by a 53,000 decline in temporary layoffs. Permanent job losers reached 2.69 million, the highest level since September 2021. The number of job leavers increased by 77,000 to 861,000. Employment in temporary help services, a leading labor market indicator since businesses typically cut temporary roles before full-time positions, fell by 15,900, continuing a five-month downward trend. The number of people working part-time for economic reasons decreased by 170,000 to 4.58 million, while the share of multiple jobholders rose by 17,000, representing 5.4% of total employment.

Wages and Hours

Wage growth remained steady, with average hourly earnings rising 0.2% month-over-month (slightly below expectations) and 3.8% year-over-year (slightly above expectations). Meanwhile, average weekly hours worked held at 34.2, unchanged from the prior month and in line with expectations. These figures suggest a moderate pace of consumer spending.

Existing Home Sales – October Update: 

According to the National Association of Realtors, existing home sales rose 1.2% in October to a seasonally adjusted annual rate of 4.10 million units, up from September’s revised 4.05 million and above market expectations of 4.08 million. This marks the highest level since February (4.27 million), supported by easing mortgage rates. The October increase, despite the federal government shutdown, suggests the housing market is showing signs of life after hovering near 4 million units for most of the year.

Regional monthly breakdown (MoM):

• Northeast: Unchanged
• Midwest: +5.3%
• South: +0.5%
• West: -1.3%

Year-over-year growth:

• National: +1.74% (down from +3.85% in September)
• Northeast: +4.3%; Midwest: +2.1%; South: +2.8%; and West: -2.6%

Single-Family & Condo/Co-Ops Sales

• Single-family homes: +0.8% MoM to 3.71 million units (+1.9% YoY)
• Condominiums & co-ops: +5.4% MoM to 390,000 units (unchanged YoY)

Home Prices:

The median existing home price rose 2.1% YoY to $415,200, marking the 28th consecutive month of annual gains—well below the 2024 average growth of 4.5%. All regions posted increases, with the West up 0.1% to $628,500.

Inventory & Supply:

• Unsold inventory decreased by 0.7% MoM to 1.52 million units, among the highest since May 2020.
• Inventory remains below pre-pandemic levels (1.9 million) but is up 10.9% YoY from October 2024 (1.37 million).
• Months’ Supply of Inventory (MSI): 4.4 months, up from 4.1 months a year ago (4–7 months is considered an indication of a balanced market).

Buyer Composition:

• First-time buyers: 32% (up from 30% MoM and 27% YoY)
• All-cash sales: 29% (down from 30% MoM; up from 27% YoY)
• Investor purchases: 16% (up from 15% MoM; down from 17% YoY)
• Distressed sales (foreclosures/short sales): 2% (unchanged)
• Median time on market: 34 days (up from 33 days MoM; 29 days YoY)

Mortgage Rates:

• Freddie Mac reported the average 30-year fixed-rate mortgage at 6.25% in October (down from 6.35% in September and from 6.43% YoY).
• Weekly average ending November 20: 6.26%.

Jobless Claims – Week Ending November 15:

The Labor Department released the latest weekly initial jobless claims data, offering the most up-to-date snapshot of the labor market’s health. For the week ending November 15, initial claims fell by 8,000 to 220,000 – down from 228,000 the prior week. This figure came in below market expectations of 227,000, signaling continued labor market stability despite a recent uptick in corporate layoff announcements. The four-week moving average declined to 224,250, a decrease of 3,000 from the previous week.

Continuing claims, which represent the total number of individuals receiving unemployment benefits, rose to 1.974 million for the week ending November 8 – an increase of 28,000 from 1.946 million the prior week. This marks the highest level since November 6, 2021, when claims stood at 2.041 million. The steady rise in continuing claims over the past six weeks suggests it is becoming increasingly difficult to secure new employment, reflecting a softer hiring environment. Overall, initial and continuing claims reinforce the current dynamic of low hiring and low firing in the labor market.

Market Analysis:

Equity Market Weekly Recap

Equity markets posted losses this week after a turbulent stretch, with the S&P 500 and Nasdaq declining 1.95% and 2.74%, respectively. The S&P 500 is down 3.5% for November, while the tech-heavy Nasdaq has fallen more than 6% and recorded its longest weekly losing streak since March.

The downturn was driven by concerns over high valuations in technology and artificial intelligence stocks, fears of a slowing economy, and pressure on investors to lock in profits. Markets were focused on Nvidia’s earnings report Wednesday, which came in strong and highlighted continued robust demand for its AI chips and related systems. This initially sparked a rally following the release. However, a sharp selloff swept across the market on Thursday.

Sentiment improved Friday after New York Fed President John Williams suggested potential support for a December rate cut, fueling expectations for another reduction sooner rather than later. Technology stocks ended the week down 4.7%, while healthcare and communication services posted gains.

Weekly and Year-To-Date (YTD) Performance Highlights:

• Nasdaq: -2.74% (weekly) & +15.34% (YTD), closing at 22,273
• S&P 500: -1.95% (weekly) & +12.26% (YTD), ending at 6,603
• Dow Jones Industrial Average: -1.91% (weekly) & +8.70% (YTD), closing at 46,245
• Russell 2000: -0.78% (weekly) & +6.25% (YTD), ending at 2,369

Treasury Market Update

Treasury yields declined across the curve this week:

• 2-year yield: 3.51% (-11 bps)
• 5-year yield: 3.62% (-12 bps)
• 10-year yield: 4.06% (-0.08 bps)

The decline was primarily driven by several factors:

• Dovish comments from New York Fed President John Williams on Friday, which boosted expectations for a December rate cut.
• Flight-to-safety sentiment amid heightened stock market volatility.
• Risk-off positioning due to the absence of key economic data, including October unemployment and CPI reports, as the Bureau of Labor Statistics was unable to collect data during the recent government shutdown.

Rate Cut Expectations

Markets now assign a higher probability to a rate cut at the December 9–10 FOMC meeting, with odds rising to 63% from 43% last week – still close to a coin flip. Looking further ahead to 2026 and 2027, markets have fully priced in four 25-basis-point cuts in January, June, July, and the following January. These moves would lower the federal funds rate upper bound to 3.00% from the current 4.00%.

Commentary

Although outdated, the stronger-than-expected rise in September payrolls, coupled with a still-low unemployment rate, underscores the Fed’s challenge in determining the appropriate policy path. The uptick in unemployment may raise concern, but it largely reflects higher labor force participation rather than weak job creation. With the September jobs report stable, no CPI data available, and the November jobs report scheduled after the December FOMC meeting, it appears likely the Fed will remain on the sidelines in December. As Chair Powell indicated before, “if you drive in the fog, you need to slow down.”

Next Week’s Economic Calendar:

The upcoming week is packed with September economic data that was delayed due to the government shutdown. Key Scheduled releases include:

• Monday:
  • Housing Starts & Building Permits (September)
  • New Home Sales (September)
• Tuesday:
  • Retail Sales (September)
  • Produce Price Index (PPI) (September)
  • Conference Board Consumer Confidence (November)
• Wednesday:
  • Weekly Initial Jobless and Continuing Claims
  • Durable Goods Orders (September)

For a visual representation of this week’s economic review, you can view or download the slide deck here: 11.21.2025 CBC Weekly Economic Update Slides

Mark Yoon, CFA CPA

EVP & CFO of Commercial Bank of California

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