The US labor market’s layoff announcements have shown a marked decline in November 2025, signaling easing corporate caution. The 71,321 job cuts represent a 53% month-over-month (MoM) drop from October’s 153,074, and are 23% above the 12-month average of 57,727. This moderation follows a volatile year marked by spikes in March (172,017) and April (275,240), reflecting sectoral adjustments and external shocks.

Drivers this month

• Technology sector layoffs slowed after a sharp rise in Q2 and Q3.
• Retail and manufacturing cuts remained steady but below prior peaks.
• Energy sector layoffs stabilized amid steady oil prices.

Policy pulse

The decline in job cuts aligns with the Federal Reserve’s recent pause in interest rate hikes. The Fed’s tightening cycle, which peaked mid-2025, aimed to cool inflation without triggering widespread layoffs. The current reading suggests labor market resilience despite tighter financial conditions.

Market lens

Immediate reaction: The US dollar index (DXY) strengthened 0.30% post-release, reflecting improved risk sentiment. The 2-year Treasury yield fell 5 basis points, indicating reduced recession fears. Equity markets, represented by the SPY, rallied modestly on the news.

Core macroeconomic indicators provide context for the Challenger job cuts data. The US unemployment rate held steady at 3.70% in November, while nonfarm payrolls expanded by 210,000 jobs, exceeding expectations. Inflation, measured by the Consumer Price Index (CPI), slowed to 3.10% year-over-year (YoY), down from 3.50% in October.

Monetary policy & financial conditions

The Federal Reserve’s benchmark rate remains at 5.25%, with forward guidance signaling a cautious stance. Financial conditions have tightened moderately, with credit spreads widening slightly but remaining within historical norms. The yield curve remains inverted between 2- and 10-year Treasuries, a traditional recession warning.

Fiscal policy & government budget

Federal fiscal policy remains expansionary, with a projected 2025 deficit of $1.40 trillion. Infrastructure and social spending continue to support aggregate demand, cushioning the labor market from sharper downturns. However, rising debt service costs could constrain future fiscal flexibility.

External shocks & geopolitical risks

Global supply chain disruptions have eased, but geopolitical tensions in Eastern Europe and East Asia persist. Energy prices remain volatile, with Brent crude hovering near $85/barrel, influencing inflation and corporate costs. These external factors contribute to cautious corporate hiring and layoff decisions.

Market lens

Immediate reaction: The USDEUR currency pair dipped 0.20% following the report, reflecting a mild risk-on sentiment. The QQQ tech-heavy ETF gained 0.50%, benefiting from reduced layoff fears in technology. The BTCUSD crypto pair rose 1.20%, reflecting broader risk appetite.

Looking ahead, the Challenger job cuts data suggests a cautiously optimistic labor market trajectory. Three scenarios emerge for 2026:

Bullish scenario (30% probability)

• Continued moderation in layoffs as economic growth accelerates to 2.50% GDP expansion.
• Inflation falls below 2.50%, allowing the Fed to ease monetary policy in H2 2026.
• Corporate investment rebounds, supporting job creation and wage growth.

Base scenario (50% probability)

• Job cuts stabilize near current levels with moderate GDP growth around 1.50%.
• Inflation remains sticky at ~3%, keeping Fed rates steady through 2026.
• Geopolitical risks and supply chain issues persist but do not escalate.

Bearish scenario (20% probability)

• Layoffs rise again due to a sharper economic slowdown or recession.
• Inflation spikes from energy or food shocks, forcing aggressive Fed tightening.
• Financial conditions tighten further, leading to credit stress and corporate retrenchment.

Overall, the data from the Sigmanomics database and broader economic indicators favor the base case but warrant vigilance for downside risks.

The November 2025 Challenger job cuts report signals a labor market in transition. The sharp MoM decline in layoffs reflects easing corporate caution amid stable macroeconomic conditions. However, elevated job cuts relative to the 12-month average underscore ongoing structural challenges. Monetary policy remains a key variable, with the Fed’s next moves likely to shape labor market dynamics. External shocks and geopolitical tensions continue to cloud the outlook. Investors and policymakers should monitor these trends closely as they navigate the balance between growth and inflation risks.