One of the most eagerly awaited economic indicators is poised for release on Thursday: the long-overdue jobs report for September, which was initially scheduled for October 3. The release coincides with the influx of delayed economic data that was postponed as a result of the unprecedented government shutdown. After remaining on the shelf for six weeks, the months-old data risks appearing outdated, particularly in a rapidly evolving economy that is becoming increasingly precarious for numerous Americans and businesses. Economic uncertainty and the escalating cost of living have led consumers to reduce their spending, as evidenced by the experiences of The Home Depot and Target. Affordability concerns are escalating significantly, to the extent that President Donald Trump has exempted certain grocery items such as coffee, beef, and fruit from high tariffs. Nevertheless, the conclusion of the federal data drought offers a crucial insight into the recent performance of the economy and the outlook for the upcoming months.
Furthermore, Thursday’s report could potentially represent the final unblemished jobs report for several months, as the shutdown disrupted the meticulously calibrated process of data collection and analysis throughout October and into part of November. On Wednesday, it was revealed that a portion of the October jobs data – specifically the payroll figures from the establishment survey – will be incorporated into the November jobs report, which has been rescheduled to December 16, moving from its original date of December 5. Statistics indicated that the household survey data could not be collected. Consequently, Thursday’s jobs report will serve as an essential benchmark for the US labor market as it approaches the fourth quarter. Expectations among economists indicate that 50,000 jobs were added in September, with the unemployment rate remaining stable at 4.3%, as per reports. The consensus estimates indicate an improvement from the preliminary 22,000-job gain recorded in August.
Should the job gains for September align with expectations at 50,000, this would position the year to record the most subdued employment growth since the pandemic, and prior to that, the Great Financial Crisis. “I’m not expecting huge changes in the (September) report, relative to past reports,” stated Allison Shrivastava. “I genuinely anticipate the persistence of this lackluster job market that we’ve observed.” The labor market has exhibited a pattern characterized by minimal hiring and minimal layoffs, with the majority of employment growth concentrated in the health care and social services sectors. The trend was predominantly validated by a range of private sector labor market data published amid the shutdown. Nevertheless, although economists do not anticipate significant surprises, Thursday’s report carries notable risks, particularly regarding the implications for monetary policy. The Federal Reserve reduced interest rates by a quarter point on October 29, citing a “less dynamic and somewhat softer labor market,” as noted by Jerome Powell during that period.
“Anything that appears somewhat unattractive at present has had the capacity to develop for a bit longer, during the six weeks prior to gaining a clearer perspective on it,” Oliver Allen told. Job growth was anticipated to decelerate after the post-pandemic economic recovery; nevertheless, it has exhibited a virtually stagnant trend over the past few months. Since May, the average monthly job gains have been 31,000, representing approximately one-fifth of the average observed in 2024, according to data. “We’re in this place of such uncertainty because there’s so much change in policy,” Shrivastava noted, highlighting the frequently changing tariff rates imposed by the Trump administration. The economy has maintained its expansion in recent months, with consumer spending remaining resilient; however, it is primarily affluent Americans who are sustaining those expenditures. “This is already a rather unstable spending situation that could easily collapse,” she stated. The bifurcation, commonly referred to as K-shaped or two-lane, in the spending environment has further exacerbated the bifurcation in the labor market. Excluding health care, social services, and to a degree, leisure and hospitality, job growth has either stagnated or declined across numerous sectors, she noted. Alongside the uncertainty surrounding trade policy, she noted that elements such as immigration, artificial intelligence, federal employment and funding cuts, elevated interest rates, and the overhiring that occurred during the pandemic are acting as significant headwinds. Consequently, this will persist in exerting downward pressure on wages and act as obstacles for individuals attempting to enter or re-enter the labor market, she stated. Continuing jobless claims, submitted by individuals who have been unemployed for a week or longer, remain elevated, approaching four-year highs, according to data.
The most recent claims data, partially reported this week, indicated that continuing claims reached 1.957 million as of October 18, marking the highest level since August. “We find ourselves in a precarious situation, characterized by anemic conditions, yet this is not entirely negative,” Shrivastava stated. Nevertheless, layoff activity has not shown a concerning increase: First-time claims for unemployment benefits stood at 232,000 as of October 18, a figure consistent with September’s numbers. “If claims are in the order of 300,000 to 400,000 and once we kind of are consistently above that level, then I’d start to be a little more worried about the job market in general,” stated Oren Klachkin, a financial market economist in an interview. Currently, Klachkin and fellow economists “don’t see a recession on the horizon anytime soon.” “If I had to put a metaphor around it, it’s like we’re at the end stages of a marathon for the labor market,” Klachkin stated. “We emerged from the pandemic with significant advancements in employment growth, and we are now approaching the latter phases of this so-called race, where the labor market appears to be somewhat softer, somewhat slower, and potentially at risk, considering our current position in the economic cycle.” The labor market faces the risk of a downturn; nevertheless, the probabilities remain tilted towards it persevering towards a conclusion, potentially receiving a boost early next year from heightened clarity regarding tariff rates and a possible fiscal enhancement stemming from the tax and spending legislation. “In the earnings results for the third quarter, the corporate sector is still essentially signaling that we can be relatively upbeat about the economy into next year,” Klachkin stated.