Mortgage Rates to Hold Firm as Delayed Jobs Report Shows Unemployment at 4-Year High

Rates will stay mostly steady today after the delayed September jobs report showed both a rising unemployment rate, and strong but concentrated jobs growth in the private sector. The path forward for the Fed’s December 10 meeting is unclear with no more official jobs data until December 16.

The Fed is looking for a clear signal on the job market, but the September data is sending a mixed message with rising unemployment and strong jobs growth in leisure/hospitality and healthcare sectors. Overall, the message tilts negative, pointing to a weakening—but not recessionary—labor market.

• The unemployment rate rose from 4.33% to 4.44%, the highest level since October 2021. The change was driven by a rise in labor force participation, meaning more people joining the labor force but not finding jobs yet. The unemployment rate has risen from the mid 3’s three years ago to 4.0% in January 2025 to now the mid 4’s as a result of years of tighter monetary policy and tariff policy.
• 119,000 jobs were created in September (vs. 50,000 expected), with 57,000 of the total in healthcare and 47,000 in leisure and hospitality. Other sectors were mostly flat or down.
• The revisions indicate 33,000 fewer jobs were created in July and August than previously reported, meaning the data now shows negative job creation in June and August. However, the three- and six-month average rate of job creation are both around 60,000 jobs per month, which is near the breakeven rate of job creation needed for the economy.
• Overall, the narrative appears to be a weaker labor market that has maybe found some footing since the summer. However, the risk of further unwelcome deterioration is high given the concentration of job creation.

Odds for a cut at the Fed’s December 10 meeting will rise slightly, but the outcome of this meeting may be a nail biter with the shutdown delaying the release of October and November jobs data until December 16.

• Today’s jobs data, being both somewhat mixed and outdated, does not definitively point the Fed in either direction. The latest FOMC minutes from the October meeting show a clear division about how to proceed. Deliberations amongst committee members, rather than economic data, will likely decide the outcome of the December meeting.
• The BLS has not announced a release date for the October and November CPI reports, but they will almost certainly be after the Fed meeting as the original date was December 10.

Mortgage rates will hold steady for now, but will wobble up or down between now and the Fed meeting as a rate cut gets fully priced in or priced out.

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