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Unemployment rate: Mixed signals, clear trend

January 21, 2026

The latest payrolls report, released January 9, may have been noisy, but U‑3 unemployment* data highlights the broader trend of labor‑market cooling remains firmly in place. The recent dip in the unemployment rate stands out mainly as short‑term noise against a longer‑running upward trajectory. “The bright spot from the report was clearly the decline in the unemployment rate,” said Garrett Melson, Portfolio Strategist, Natixis Investment Managers Solutions. “But one month does not make a trend and the upward trend for unemployment remains very much intact.”

 

U-3 unemployment rate (1/31/23–12/31/25)
U-3 unemployment rate (1/31/23–12/31/25) Source: Bloomberg
  • The steady rise in unemployment points to a labor market gradually losing momentum rather than maintaining the tightness of prior years.
  • Higher unemployment readings often signal that workers are finding fewer opportunities, even as overall job creation remains uneven.
  • An unemployment rate trending upward typically reflects employers becoming more selective, prioritizing efficiency over expansion.
  • A low-churn labor market means employees in their seats longer, gaining efficiencies, producing more with less, and less time wasted onboarding and learning new skills, according to Melson.

* The U 3 unemployment rate is the official measure published by the U.S. Bureau of Labor Statistics that tracks the share of people who are jobless, available for work, and actively seeking employment.

This material is provided for informational purposes only and should not be construed as investment advice. The views and opinions contained herein reflect the subjective judgments and assumptions of the authors only and do not necessarily reflect the views of Natixis Investment Managers, or any of its affiliates. The views and opinions expressed may change based on market and other conditions. There can be no assurance that developments will transpire as forecasted, and actual results may vary.

All investing involves risk, including the risk of loss. Investment risk exists with equity, fixed income, and alternative investments. There is no assurance that any investment will meet its performance objectives or that losses will be avoided. Investors should fully understand the risks associated with any investment prior to investing.

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