By Harshit, WASHINGTON, NOV. 7 / 8 AM EDT
For the second consecutive week, the federal government shutdown has halted the release of the closely watched monthly jobs report, leaving economists, policymakers, and markets without official clarity on the state of the U.S. labor market. In the absence of the Bureau of Labor Statistics’ (BLS) nonfarm payrolls report, analysts are turning to private-sector and alternative indicators to assess hiring trends, layoffs, and wage pressures.
Economists surveyed by Dow Jones estimate that the withheld October report likely would have shown a decline of approximately 60,000 jobs and an increase in the unemployment rate to around 4.5%, signaling a further slowdown in the labor market. While the projected decline shows weakening momentum, it does not suggest a widescale collapse.
A Labor Market Defined by Caution
One defining feature of the current environment is the balance between limited hiring and limited firing. Businesses are hesitating to expand payrolls amid policy uncertainty and uneven consumer demand, yet layoffs have not risen enough to indicate recession-level stress.
“We’re in an unusual environment, which is this low-hiring, low-firing environment,” said Austan Goolsbee, president of the Federal Reserve Bank of Chicago. “That characterizes periods of high uncertainty, when businesses have pulled back.”
The Chicago Federal Reserve’s labor indicators, introduced recently as an alternative data tool, show the unemployment rate edging toward 4.4% while layoffs remain historically subdued. The data suggests that employers are cautious but not panicked.
Private Data Points to Slower Hiring
With the official numbers unavailable, analysts are relying on private job trackers:
- ADP, a payroll processing firm, reported that employers added 42,000 jobs in October, a figure that reflects weak but positive hiring.
- Challenger, Gray & Christmas reported 153,074 job cuts in October, the highest for the month in 22 years, indicating that some companies are trimming staff in anticipation of softer demand.
- The Institute for Supply Management (ISM) reported that employment indices for both manufacturing (46) and services (48.2) remain below 50, signaling contraction in hiring intentions.
Meanwhile, new data from Bank of America revealed payroll growth of 0.5% year over year and widening income gaps. Higher earners saw 3.7% wage growth, middle-income workers 2%, and lower-income workers just 1%, reflecting ongoing pressure on household budgets.
Small Businesses Under the Most Strain
Small firms, which tend to be more vulnerable to financial and borrowing constraints, are showing clearer signs of labor pullback. Workforce management platform Homebase reported that small business staffing and total hours worked were both down 2.9% since January.
“The story now for 12 months has been one of small business conservatism,” said Homebase CEO John Waldmann. “Businesses are choosing to have fewer people and have them work more hours.”
ADP data supports that trend.
Businesses with:
- Fewer than 250 employees lost 34,000 workers in October.
- Fewer than 50 employees added workers earlier in the year, but hiring momentum has slowed sharply in recent months.
Cooling, Not Collapsing
Despite the slowdown in hiring, claims for jobless benefits remain relatively stable at the state level. Goldman Sachs estimates that jobless claims would have totaled around 228,000 last week — slightly higher, but in line with recent trends.
“We’re showing a cooling labor market … but certainly not a collapsing labor market,” said David Tinsley, senior economist at the Bank of America Institute.
Federal Reserve policymakers are closely monitoring the situation. Without updated inflation data, some officials are reluctant to change interest rates until clearer signals emerge.
“There’s been a lot of stability in the job market,” Goolsbee said. “The unemployment rate is objectively low and the layoff rate is objectively low. That’d be very unusual for the beginning of a recession.”