In a significant turn of events, economists, journalists, and investors alike are not eagerly awaiting a new jobs report this morning. This marks the second consecutive month that the Bureau of Labor Statistics (BLS) has withheld this crucial data release, a consequence of the ongoing government shutdown, which has now become the longest in U.S. history. The absence of key reports and data collection significantly impacts job seekers and economic analysts, leaving them to rely on alternative sources to gauge the state of the job market and broader economy.
Despite the lack of BLS reports, recent publications from organizations like ADP, Indeed, and Bank of America provide insights into the current job market. These analyses indicate that October has been a challenging month for job seekers, with several reports highlighting a soft job market. For instance, job cuts announced by the outplacement firm Challenger, Gray & Christmas have surged, and demand for job postings has significantly cooled, indicating a less favorable environment for job seekers.
Allison Shrivastava, an economist with the Indeed Hiring Lab, expressed to Business Insider that while private sector data releases are helpful, they often rely on BLS data for calibration. Thus, the absence of this data complicates the understanding of the job market dynamics. Here’s a closer look at what recent releases reveal about the October job market.
The ADP national employment report provided a glimmer of hope, indicating that the U.S. added 42,000 private sector jobs in October, rebounding from declines in the previous two months. Although this figure surpassed the expected 32,000 jobs, Nela Richardson, the chief economist at ADP, characterized the hiring trend as modest. The majority of job growth was concentrated in larger companies with at least 500 employees, while sectors such as information, manufacturing, professional and business services, and leisure and hospitality experienced employment declines.
Bill Adams, chief economist for Comerica Bank, noted that federal layoffs, which are not included in the ADP report, could negate the private employment growth observed in October. With many government workers affected by the shutdown and missing pay, the job landscape remains precarious.
Challenger, Gray & Christmas reported a staggering increase in announced job cuts from U.S.-based employers, reaching the highest October total since 2003. Job cuts leaped from 54,064 to 153,074 in October, resulting in over 1 million announced cuts for the year, surpassing the total cuts from the previous year. This trend reflects adjustments in various industries following the hiring surge during the pandemic, exacerbated by factors such as AI adoption, decreasing consumer and corporate spending, and rising operational costs.
Workplace expert Andy Challenger emphasized that companies like Amazon, which announced a reduction of 14,000 corporate jobs, are likely correcting for overhiring during the pandemic and the subsequent Great Resignation.
According to Indeed, job opportunities in the U.S. have hit their lowest point since 2021. Allison Shrivastava pointed out that the current job market is in a delicate state, with job postings trending downward. She noted that while the situation is not dire, it is challenging, as job seekers find it increasingly difficult to enter the labor market. Despite reports of layoffs, BLS data indicates that layoff rates have remained low for years.
Kory Kantenga, head of economics for the Americas at LinkedIn, reported that hiring in October showed little change compared to September, with a slight decline of 0.8%. The number of job openings per applicant has also cooled, indicating a slowdown in both supply and demand within the job market. Kantenga advised job seekers to remain open to industries that are still hiring, such as healthcare and construction, although the overall momentum across the job market remains sluggish.
The Bank of America Institute recently reported no significant further slowdown in the labor market, based on internal data regarding paycheck distributions among its customers. While there has been a cooling in job growth since summer, the latest findings suggest that, for now, there is no substantial deceleration in the market. Although unemployment payments have increased year-on-year, the growth rate has slightly decreased from September.
Data from Gusto, a payroll and benefits platform for small businesses, reveals that hiring rates and quit rates among small businesses saw a cooling effect in October. The net hires at small businesses fell by 5,900, marking the first decline since January. Despite a marginal increase in average hourly earnings, Andrew Chamberlain, principal economist at Gusto, noted a significant shift in small business hiring patterns due to persistently high borrowing costs, tariff uncertainties, and elevated operating expenses.
As the government shutdown continues to impact the release of critical job data, stakeholders in the economy must rely on alternative analyses to navigate the current job market landscape. With mixed signals from various reports, it is clear that the job market is facing significant challenges, making it crucial for job seekers and employers to adapt to the evolving conditions.
