The November jobs report is being released at an unusual juncture – on a Tuesday in mid-December, rather than the customary first Friday of the month – a consequence of the prolonged effects of the historically lengthy government shutdown. The 43-day federal funding lapse led to a significant halt in essential economic data at a pivotal moment for American enterprises and families. The gradual release of previously withheld data over the past month is set to culminate in a significant influx this week: In the coming three days, key reports on retail sales, inflation, and the labor market are scheduled for publication. The latter two are accompanied by a holiday bonus: The jobs report and the Consumer Price Index release for November will both incorporate approximately half of October’s data. Were it not for its unprecedented nature, it would be rather appropriate in a season characterized by buy-one-get-one-50%-off promotions. Tuesday morning’s jobs report is anticipated to reveal an addition of merely 40,000 jobs in the previous month, with the unemployment rate remaining unchanged at 4.4% – a figure that is historically low yet still elevated compared to recent years. Nonetheless, analysts suggest that the report may exhibit considerable ambiguity this time.
“These government shutdowns don’t come around very often, and so there’s always a little bit of uncertainty when you have an operation as large as what the Bureau of Labor Statistics does for the jobs report,” stated Daniel Zhao. “It is prudent to approach the report with humility and readiness for any outcome.” The monthly report from the Bureau of Labor Statistics on the labor market is derived from two comprehensive surveys: one targeting businesses and public sector organizations (monitoring payroll, wages, and hours) and the other focusing on households (assessing labor force status along with demographic details). The latter survey is carried out in collaboration with the US Census Bureau, where personnel engage with households to gather raw data through in-person visits, phone calls, emails, and online interactions. Nonetheless, the principal federal statistical agencies essentially ceased operations during the shutdown that extended from October 1 to November 12. The predominant number of workers experienced furloughs, while the agencies in question halted the collection, processing, and distribution of nearly all data. “In practice, it’s surprisingly hard to ask individuals what they were engaged in previously,” Zhao stated. “Their recall diminishes quite rapidly. Consequently, it is prudent to begin analyzing the forthcoming data.
The absence of workers to carry out household interviews during the designated survey week led the BLS to subsequently declare that the labor force data for October, encompassing the unemployment rate, would remain undisclosed. Furthermore, the agency indicated that it would not issue a distinct jobs report for that month. Instead, data collected electronically in October would be incorporated into the November jobs report. The Bureau of Labor Statistics indicated that for November, the collection period for both surveys was extended, and additional processing time was provided. The November jobs report has been rescheduled from December 5 to December 16. Zhao remarked, “I think there’s a placid pace of jobs growth that seems most likely for the report. There is, of course, a significant caveat to that.” The clarity regarding the effects of the shutdown disruptions is expected to emerge on Tuesday. The Bureau of Labor Statistics, known for its strong transparency practices, includes box notes in its reports to provide essential context or address technical issues when necessary. Despite the furlough of over 700,000 federal workers during the 43-day shutdown, a significant negative impact on October’s employment figures, followed by a robust employment surge in November, is not anticipated, according to a recent note to investors from Bank of America economist Shruti Mishra. “The establishment survey counts workers who were paid or expect to be paid for any part of the reference week as employed,” she wrote. “Indeed, the shutdown had a negligible effect on payrolls in 2013 and 2019.” Zhao indicated that the jobs data for both October and November may be more comprehensive and less prone to revision due to the extended submission and collection time frames.
Although Tuesday’s report will present a somewhat incomplete view of the labor market, a variety of private and public data published in recent weeks has contributed to a more comprehensive understanding. ADP’s monthly private-sector employment reports indicate a net increase of 47,000 jobs for October, contrasted by a net decrease of 32,000 jobs for November. Additionally, the latest BLS data released last week indicated that while job openings rose in October, hiring remained stagnant, layoff activity intensified, and employees held onto their positions with considerable reluctance. “I believe the September jobs number likely represents a peak for what we can expect in the forthcoming data,” stated Tyler Schipper. Thomas in St. Paul, Minnesota. “My estimation falls within the range of 0 to 50,000 jobs when comparing the two reports. One of them might end up being negative and one of them might end up being positive. However, I do not anticipate a shift from this impasse where job creation remains insufficient to maintain a low unemployment rate,” he added. Nonetheless, prior to the shutdown, the October jobs report was anticipated to indicate sluggish, if not negative, employment growth. Between 100,000 and 150,000 federal workers were anticipated to exit the payrolls on October 1, following their acceptance of the “fork in the road” paid leave buyout offers introduced months prior by the Trump administration’s Department of Government Efficiency initiative. That constitutes approximately 5% of total federal employment and a small fraction of overall employment; however, the significant reduction will skew the payroll estimates for October.
According to Mishra, October may reflect a net decline of 65,000 jobs, with an anticipated reduction of 120,000 jobs in the public sector contrasted by a gain of 55,000 jobs in the private sector. This would represent a significant decline from the unexpectedly robust employment growth of 119,000 jobs recorded in September, a number that Mishra indicated may be subject to downward revision. In addition to the headline payroll figures and the unemployment rate for November, the detailed findings from last month’s establishment and household surveys may offer a more essential insight into the health of the US economy, according to economists. The industry-specific breakdown of job gains will be crucial to monitor, as highlighted by Dean Baker, senior economist at the Center for Economic and Policy Research. He anticipates a decline in employment within goods-related sectors, whereas health care and possibly restaurants are likely to sustain job growth. Wage growth is anticipated to decelerate, potentially exerting additional pressure on forthcoming consumer expenditure. The trajectory of labor force participation rates, employment to population ratios, and unemployment data will serve as crucial indicators of how Americans are navigating the jobs market, according to Cory Stahle. “At the end of the day, if you’re creating 100,000 jobs a month but … the unemployment rate is rising or individuals are expressing, ‘I simply can’t find anything; I’m no longer going to participate in the job search,’” that will ultimately impact the labor market, Stahle noted.