Mounting Evidence of a Weaker Job Market
The job market is flashing more signs of softness and with the Fed meeting on December 10, every piece of data now directly affects the odds of another rate cut. Inflation came in as expected, private payrolls fell again, and continuing claims remain elevated. For buyers and sellers, these trends could influence affordability and activity as we head into the new year.
Here’s what really matters this week and what it means for us in the market!
Small Businesses Drive a Sharp Drop in Private Payrolls
→ What This Means for Rates: More signs of labor softness increase the likelihood of future rate cuts.
ADP reported that the private sector lost 32,000 jobs in November, missing expectations and marking the fourth month of weakening momentum.
- Small businesses: –120,000
- Medium-sized companies: +51,000
- Large employers: +39,000
- Six of ten industries declined
- “Job switchers” still see higher pay gains than “stayers,” but the gap is the smallest it’s been in five years
ADP’s Chief Economist described the trend as “cautious consumers, an uncertain economy, and broad slowing led by small businesses.”
Bottom Line for Agents & Buyers:
The labor market is one of the Fed’s biggest concerns right now. Weak job growth → Lower rate pressure → Better affordability
This is the type of data that can help turn winter shoppers into preapproved buyers.
Quick refresher: Changing the Fed Funds Rate affects short-term borrowing and influences mortgage rate movement but doesn’t directly set them.
Additional Indicators Point to a Softer Job Market
→ What This Means for Activity: Slower hiring = buyers gaining leverage as affordability improves.
The newest data continues the same trend:
- Initial jobless claims: Down 27,000 to 191,000, but likely skewed by Thanksgiving delays
- Continuing claims: Still above 1.9 million for 6+ months — people are taking longer to find new jobs
- Layoff announcements (Challenger report): 71,000 in November, a 24% increase
- Hiring plans: Weakest pace since early 2010s
Bottom Line for Agents & Buyers:
This is the clearest picture yet of a cooling job market and cooling job markets historically soften mortgage rates. If the economy continues slowing, it could accelerate affordability improvements early in 2026.
PCE Inflation Data Points to Possible Rate Cut
→ What This Means for the Fed: Inflation isn’t flaring up — giving policymakers room to ease.
The delayed September PCE inflation report showed:
- Overall PCE: +0.3% monthly, 2.8% annually
- Core PCE: +0.2% monthly, 2.8% annually (slightly better than expected)
No surprises here and that’s actually good news.
Bottom Line for Agents & Buyers:
Stable inflation + weaker labor data = more pressure on the Fed to cut the Fed Funds Rate. If the Fed moves in December or signals more cuts ahead, mortgage rates could continue easing.
Family Hack of the Week
Walnut Brownies for National Brownie Day (Dec 8!) Try that decadent recipe from Food Network, it's perfect for the season — and makes about 20 brownies!
What to Look for This Week
Big week ahead:
- Tuesday: JOLTS reports for September & October (job openings)
- Wednesday: Fed decision + press conference
- Thursday: Latest jobless claims
These reports shape expectations for January and beyond.
Technical Picture
- Mortgage Bonds are trading between support at the 25-day and 50-day Moving Averages and resistance at 101.32
- The 10-year Treasury yield broke above 4.126% Fibonacci resistance, and now has room to climb toward the 100-day Moving Average
Stronger bond performance → better rates. A soft Fed tone this week could be the catalyst.
