If you thought the first Friday of the month felt incomplete without the opportunity to analyze the Bureau of Labor Statistics’ eagerly anticipated monthly jobs report, fret not. You likely haven’t missed much.
As the BLS remains inactive due to the shutdown in Washington, alternate reports outside government statistics imply that the labor market barely moved in September.
The Dow Jones forecast anticipated an increase of 51,000 nonfarm payrolls, with the unemployment rate remaining stable at 4.3%.
High-frequency indicators, including job advertisements, private payrolls, and regional data on initial jobless claims, suggest that while job growth is sluggish, the labor market as a whole isn’t collapsing, at least not in the near future.
“We contend with the resources currently available during critical times like this, where it’s essential to determine if the economy is experiencing a transitional phase,” Chicago Federal Reserve President Austan Goolsbee stated in a CNBC interview on Friday. “This is our current situation, and to this point, it continues to indicate a relatively stable labor market.”
The Chicago Fed is among those aiming to offer alternatives to BLS data, which faced severe criticism from the White House ahead of this week’s shutdown.
Although the timing was coincidental, the central bank district introduced its own dashboard of metrics in September, tracking vital labor market statistics such as unemployment, hiring rate, and layoff rate.
In summary: The unemployment rate remained unchanged at 4.3%, although a slight increase of a hundredth or two could have raised it to 4.4% — the highest since October 2021 but still low compared to historical figures.
Other private data indicated similar patterns: Conditions are generally softening, with a gradual reduction in job availability.
Nonetheless, employers are still hesitant to let go of staff, having learned from the Covid pandemic that initial waves of layoffs led to the challenging process of hiring back those positions. At one point, job openings exceeded available workers by more than 2 to 1.
“Many newcomers in the job market, including young individuals, recent graduates, and those already unemployed, are finding it difficult to enter the workforce,” said Cory Stahle, senior economist at job postings platform Indeed, which itself offers a comprehensive array of labor market data. “Regardless of the unemployment rate, prolonged job searches are indicative of economic distress for certain households.”
Indicators of imbalance
Indeed’s job postings metric recorded a decrease of approximately 8.9% since last year as of Sept. 26, representing a steeper decline than the 5.5% indicated in BLS statistics, which only cover up to August.
Wider trends point to an uneven labor market, with sectors like health care flourishing while others lag behind, according to Stahle.
“Overall, the situation appears relatively positive, yet much of the job growth and many of the postings and hiring activities are centered around health care; hence, it’s challenging to assert that the labor market is entirely balanced when it doesn’t offer equal opportunities across various fields,” he remarked.
BLS data has also highlighted a considerable shift in job openings favoring health care-related occupations, with business and professional services following, and leisure and hospitality trailing. The government had previously been a leading sector but has decreased its presence since President Donald Trump commenced his term in January with a commitment to reduce the federal workforce.
“Currently, it is a favorable time to be a nurse, but not so much for software developers,” Stahle added. “This division within the labor market is also a crucial factor to monitor, beyond just the overall balance and aggregate figures.”
Other metrics reflect a similar narrative, although ADP’s count of private payrolls for September revealed a drop of 32,000 jobs, alongside an August reduction of 3,000. ADP has also faced criticism for discrepancies with BLS data. Nonetheless, its reports are receiving closer scrutiny after it indicated a labor market slowdown well before the BLS revised its figures to show a weak hiring landscape.
It wasn’t solely the nonfarm payroll data that went unreported due to the shutdown: The Labor Department also failed to publish its weekly count of initial jobless claims.
Goldman Sachs stepped in for that metric, estimating that state-level claims data filed pointed to a national total of 224,000 — slightly elevated compared to the previous week but largely in accordance with the year’s trends.
Additional metrics
Beyond just job or payroll counts, expenditure data can also serve as a valuable indirect indicator.
Bank of America’s tracking of credit and debit card transactions indicated consistent spending growth in September. Total card expenditures from the previous year rose by 2.2% for the week ending Sept. 27.
“Spending growth remains robust despite softer labor data. We will continue to observe this disparity,” noted BofA economist Shruti Mishra in a client statement.
Similarly, Fiserv’s index for small businesses reported a 2.3% increase in annual sales and transactions for September, maintaining the same growth rate observed over the last three months.
However, other indicators for small businesses exhibit signs of weakness.
“At present, we find that numerous companies have job openings. Unfortunately, very few are actually filled,” Bill Dunkelberg, chief economist at the National Federation of Independent Business, told CNBC on Friday. “Thus, while intentions to fill these roles remain very optimistic, the reality is that few jobs are effectively generated.”
