The condition of America’s workforce remains undetermined, as the Bureau of Labor Statistics is currently not operational. The non-farm payrolls report will be delayed even if the unlikely event that the government reconciles today. The Chicago Federal Reserve compiled a separate report that indicates a contraction in the workforce.
Unemployment remains stagnant at 4.34%, up a mere 0.01% from August. Layoffs also remained relatively unchanged at 2.1%. We have not reached the point of mass layoffs where companies can no longer afford to pay their employees. Challenger, Gray & Christmas reported in a separate analysis that layoffs declined 37% in September and fell 26% YoY. The company reported that planned furloughs are at their highest level since 2020, with 946,426 cuts between Q1 and Q3.
Companies are fighting to retain employees, and there are no signs of expansion. New hires for the year totaled 204,939, marking a massive 58% annual decline. The US economy has not seen such a slow pace of hiring since 2009 in the aftermath of the Great Recession. Yet, the jobs data under the Biden Administration hid the real problem as the PUBLIC sector multiplied while the private sector stagnated.
The ADP report that is used as a confirmation of the BLS has been closely monitored in the wake of the government shutdown. The private sector eliminated 32,000 positions in September–a glaring warning sign as the markets were predicting an expansion of over 50,000. Private payrolls for August were revised to show a loss of 3,000 jobs, after data initially indicated a gain of 54,000. The ISM manufacturing survey index slightly rose to 49.1 in September from 48.7 but remains in depleted territory.
Small-and medium-sized businesses have been hit the hardest. Large corporations with over 500 employees did, in fact, add 33,000 jobs, offset by the number of layoffs smaller companies were forced to endure. Wage increases for workers who changed jobs in September fell to 6.6% from 7.1% MoM. Annual wage growth for job-stayers fell flat.
“Despite the strong economic growth we saw in the second quarter, this month’s release further validates what we’ve been seeing in the labor market, that US employers have been cautious with hiring,” ADP chief economist Nela Richardson said in a statement.
The Federal Reserve will likely state that it needs the official BLS data to make an informed decision. Powell is careful with his words. Rate cuts will not entice companies to expand, despite Washington’s insistence that they would, as employers lack confidence in the future.
