If you felt the absence of the Bureau of Labor Statistics' monthly jobs report on the first Friday of the month, you're not alone. However, it's likely that you didn't miss much significant information. With the ongoing government shutdown, the BLS has temporarily halted its operations, but alternative reports suggest that the labor market continued to progress steadily throughout September.
The Dow Jones consensus forecast indicated a growth of 51,000 in nonfarm payrolls, with the unemployment rate expected to remain stable at 4.3%. High-frequency data, which includes job postings, private payroll figures, and state-by-state initial jobless claims, point towards a modest employment growth. Although this growth has been described as anemic, the overall labor market does not appear to be in immediate danger of collapse.
In a recent CNBC interview, Chicago Federal Reserve President Austan Goolsbee emphasized the importance of understanding whether the economy is undergoing a significant transition. He remarked, "This is what we have, and thus far it still continues to point to a pretty stable labor market." The Chicago Fed has taken the initiative to provide alternative data to the BLS, which faced criticism from the White House before the shutdown. In September, the central bank launched its own dashboard that tracks key labor market metrics, including unemployment rates, hiring trends, and layoff statistics.
The current unemployment rate remains steady at 4.3%. However, even a slight increase could elevate it to 4.4%, the highest level since October 2021, although still comparatively low by historical standards. Non-governmental data align with these trends, showing a gradual softening of conditions, particularly in job availability. Employers are showing reluctance to let go of workers, likely due to the challenges encountered during the Covid pandemic when initial layoffs were followed by difficulty in rehiring.
For many newcomers to the job market—such as young workers and recent graduates—finding employment has become increasingly challenging. Cory Stahle, a senior economist at Indeed, noted that despite the current unemployment rate, prolonged job searches indicate economic distress for many households. Indeed's data indicates a notable decline of 8.9% in job postings compared to the previous year, a sharper decrease than the 5.5% decline recorded in BLS data, which only extends through August.
Broader trends reveal an uneven landscape in the labor market. While sectors such as health care continue to thrive, other fields are lagging behind. Stahle points out that while overall conditions appear favorable, the majority of job gains are concentrated in health care, leaving many occupations without equal opportunities. BLS data corroborates this trend, showing a significant tilt in job openings towards health care-related professions, followed closely by business and professional services, with leisure and hospitality not far behind.
Government employment, which had previously been a leading sector, has experienced a pullback since the beginning of President Donald Trump’s term, as he pledged to reduce the federal workforce. Currently, it seems to be an excellent time for those in nursing, while software developers may find the job market less favorable.
The bifurcation of the labor market is an essential factor to consider, as it highlights disparities beyond just overall employment numbers. Additional indicators present a similar narrative. ADP's private payroll report for September recorded a decline of 32,000 jobs, following an August loss of 3,000. While ADP has at times been criticized for inconsistencies with BLS data, its reports are receiving increased scrutiny, especially as they highlighted a slowdown in the labor market before the BLS adjusted its own figures to reflect a weaker hiring climate.
In light of the government shutdown, it wasn't only the monthly nonfarm payroll report that was missing; the Labor Department also failed to release its weekly statistics for initial jobless claims. Goldman Sachs stepped in to provide insights for this metric, estimating that state-level claims data indicated a national total of 224,000—slightly above the previous week, but consistent with trends observed throughout the year.
In summary, while the labor market shows signs of stabilization, underlying challenges persist. Stakeholders must remain vigilant and informed as they navigate this complex economic landscape.
