As the U.S. government shutdown enters its second day, the eagerly awaited nonfarm payrolls report, typically released on the first Friday of the month, was delayed. This data, produced by the Bureau of Labor Statistics (BLS), is crucial for assessing the labor market and overall economic health. While the government has gone silent, alternative data from various sources suggests the labor market remained relatively stagnant in September, despite some signs of softness.
A Mixed Bag: Anemic Job Growth, But No Collapse Yet
The Dow Jones consensus had projected the addition of 51,000 jobs in September, with the unemployment rate holding steady at 4.3%. However, with the shutdown halting the usual data from BLS, analysts have relied on private and alternative sources for a clearer view. Job posting data, private payrolls, and state-level initial jobless claims all point to a modest labor market.
In a Friday CNBC interview, Chicago Federal Reserve President Austan Goolsbee expressed confidence in the economy’s stability, despite the absence of fresh BLS data. “While we’re in a period of transition, the data we have continues to show a pretty stable labor market,” said Goolsbee. The Chicago Fed itself has been working to fill the gap left by the BLS by providing its own labor market metrics, such as unemployment, hiring rates, and layoff trends.
Unemployment Rate Holds Steady at 4.3%
According to alternative data, the unemployment rate has stayed flat at 4.3%, a modest increase from 4.2%, which would have been the next possible level based on the trendline. While this would mark the highest rate since October 2021, it’s still relatively low by historical standards.
Despite softening job growth, employers remain hesitant to let go of workers, likely due to the lessons learned from the early stages of the COVID-19 pandemic, when businesses faced significant challenges rehiring after mass layoffs.
Job Availability Continues to Shrink, but Labor Market Not Crashing
The Indeed Job Postings index shows a decline of 8.9% in September compared to the previous year. This was a sharper drop than the 5.5% decline captured in BLS data, which runs only through August.
This indicates a shrinking job pool, but it’s not necessarily a sign of a collapse. According to Cory Stahle, senior economist at Indeed, new entrants to the job market—such as young workers or recent graduates—are struggling more to find work, signaling economic stress for certain households. “Job seekers are taking longer to land positions, which is concerning, even though the unemployment rate may seem stable,” Stahle explained.
The biggest job gains, according to Stahle, are coming from healthcare, with other sectors, such as technology, lagging. “A good time to be a nurse, not so much for a software developer,” Stahle quipped, pointing out the labor market bifurcation that favors specific sectors over others.
Signs of Imbalance: Healthcare vs. Tech
The job market in September presented clear signs of unevenness, with healthcare-related jobs continuing to thrive, while other industries, like technology and government services, are struggling. BLS data has consistently shown that healthcare continues to see the most job openings, followed by business services and hospitality. Conversely, the government sector has seen a reduction in openings, a direct result of administrative changes and budget cuts under the current administration.
While the healthcare sector remains robust, it is disproportionately driving job gains, leaving other occupations particularly in tech and software development lagging behind. This uneven job growth further reinforces the notion that the labor market is not as balanced as it once was.
Alternative Data: Private Payrolls & Initial Claims
Private payrolls also offer some insight into the labor landscape. The ADP private payroll report showed a 32,000 drop in jobs for September, adding to concerns about slowing employment growth. August’s ADP numbers were also revised downward, showing a loss of 3,000 jobs.
Meanwhile, Goldman Sachs used state-level data to estimate that 224,000 initial jobless claims were filed in the week of Sept. 27, slightly higher than the previous week, but still in line with trends for the year. This suggests that while the labor market is facing challenges, it is not spiraling into crisis.
Broader Indicators: Economic Health Amid Soft Labor Data
While labor data suggests some softness, other economic indicators paint a mixed picture. For example, Bank of America’s tracking of credit and debit card spending shows a 2.2% increase in consumer spending year-over-year, indicating that consumer demand remains strong. Meanwhile, Fiserv’s Small Business Index reported a 2.3% growth in annual sales and transactions for small businesses in September, signaling steady economic activity.
However, small business owners are reporting difficulties filling positions, with Bill Dunkelberg of the National Federation of Independent Business noting that many businesses have open jobs, but few are actually being filled.
Moving Forward: What Does the Shutdown Mean for the Economy?
As the government shutdown lingers, the absence of official government data adds uncertainty to an already fragile economic landscape. Despite the challenges, the broader economic indicators suggest that while the labor market is slowing, it is not yet on the verge of collapse.
The next few weeks will be crucial in determining how the shutdown affects various sectors and whether it accelerates a slowdown or simply exacerbates existing challenges. Fed officials and economists alike are closely monitoring these developments, as they will play a significant role in shaping the economic outlook for the rest of 2025. For direct financing consultations or mortgage options for you visit 👉 Nadlan Capital Group.
