Because of the U.S. government shutdown, the September estimate of job creation by the Bureau of Labor Statistics will not be published this week.
Instead, the ADP estimate of September private sector job creation will serve as a substitute on the condition of the labor market.
ADP reported a net decline of 32,000 private-sector jobs in September, driven by a decrease of 40,000 among small firms and 20,000 among medium-size firms. Large firms hired an additional 33,000 workers.
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In addition, ADP, following the BLS benchmark revision, reduced its estimate of total employment by 43,000, including a revision down to a loss of 3,000 jobs in the August estimate.
By sector, goods-producing jobs dropped by 32,000 and service-providing jobs declined by 28,000 on the month.
The details within those sectors showed broad declines, including a loss of 2,000 jobs in construction; 7,000 in trade, transport and utilities; 13,000 in professional services; 19,000 in leisure and hospitality; and 16,000 in other services.
Those areas showing growth were led by a 33,000-job increase in education and health; 4,000 in natural resources and mining; and 3,000 in information.
The Federal Reserve gets a weekly estimate of job creation by ADP in addition to anecdotal information from around the economy, so it is not flying blind when it comes to ascertaining the condition of the labor market. This latest data supports another 25 basis-point rate cut at the Fed’s next meeting on Oct. 28-29.
The takeaway
There is no way to sugarcoat this. Hiring is at risk as policy uncertainty driven by trade and immigration policies, as well as long-term demographic challenges that are constraining the labor supply, have caused businesses to pull back on hiring.
Given that the government shutdown and threats of mass firings permeate the latest edition of the fiscal follies, the latest data is not conducive to the October payroll outlook.
