From the Wall Street trading floor to the Federal Reserve to economists sipping coffee in their home offices, there is usually silence around 8:30 a.m. ET (12:30 GMT) on the morning of the first Friday of each month as everyone awaits the Labor Department’s key monthly employment report.
However, due to the government shutdown, no job postings for September were released on Friday.
The data disruption comes at a particularly uncertain time, with Federal Reserve policymakers and Wall Street investors now needing more economic data than ever before. Recruitment has almost stalled, which threatens to drag down the broader economy. At the same time, however, consumers – especially high-income earners – are still spending, and some companies are investing more in data centers to develop AI models. Whether this will be enough to revive recruitment remains to be seen.
This is the first time since the government shutdown in 2013 that the employment report has been delayed. During the partial government shutdown in 2018-2019, the Department of Labor was one of the few agencies that remained open because Congress had agreed to fund it. Once the shutdown ends, the September employment data will finally be released.
US President Donald Trump’s administration blamed the shutdown on Senate Democrats, who made similar accusations against the White House.
White House spokesman Kush Desai said: “Businesses, households, policymakers, markets, and even the Federal Reserve are blind at a critical moment in the U.S. economic recovery as the Democratic government shutdown prevented the release of key economic data.” ”
However, when government employment data paints an unfavorable economic picture, Trump himself often belittles these data. In August, he fired the then director of the Bureau of Labor Statistics after the Bureau of Labor Statistics said job growth in May and June was much lower than previously reported.
Alternative data sources
Currently, economists are turning to alternative measures of the job market offered by nonprofits and private sector companies. These indicators mostly show that the job market is hiring less, but there are also not many layoffs. Those who have jobs appear to be mostly stable, while those looking for jobs are facing tougher times.
For example, payroll processing company ADP said on Wednesday that its estimates showed that the economy unexpectedly lost 32,000 private sector jobs last month. ADP found that companies in the construction, manufacturing and financial services sectors all cut jobs. Restaurants and hotels, as well as professional services such as accounting and engineering, also cut employees.
ADP said businesses in the healthcare, private education and information technology sectors were the only sectors to increase their workforce.
Nella Richardson, chief economist at ADP, said: “We have seen a significant decline in hiring momentum throughout the year. This is consistent with the economic conditions of low hiring – or even zero hiring – and low layoffs. ”
The shutdown also meant that the government did not release statistics on how many Americans applied for unemployment benefits each week, a substitute indicator for layoffs and usually released every Thursday.
But Goldman Sachs used data provided by most states to estimate the number of jobless claims on its own. In a report late Thursday, they calculated that weekly claims rose to 224,000, up from 218,000 the previous week. The numbers are historically low, indicating that the company is still retaining most of its workforce.
On Friday, the Institute for Supply Management, a purchasing managers’ trading organization, released its monthly report on economic activity in the services sector, covering about 90% of the economy, from banks to restaurants to retail stores to warehousing. Its index fell from 52 to 50, and 50 is the dividing line between contraction and expansion. This means that there was no change in service sector activity last month.
But the ISM survey found that service companies cut hiring for the fourth consecutive month, indicating that job growth remained weak last month.
The Federal Reserve Bank of Chicago released its monthly unemployment forecast on Thursday, a new alternative measure released last month. The Chicago Fed estimated that the unemployment rate remained low at 4.3% in September.