The U.S. Labor Department released its September jobs report on Thursday, approximately seven weeks behind its original schedule due to a government shutdown. This delay also means that the next jobs report will not be available until mid-December.
September Job Market Overview
The report provides data for the month of September, offering insights into hiring and firing trends. This follows a period of slower job growth over the summer, during which employers added an average of less than 30,000 jobs per month.
Federal Reserve's Assessment
Federal Reserve governor Chris Waller has expressed concerns regarding the stability of the job market. Waller indicated that recent conversations with business leaders suggest a potential shift in employment strategies. He noted that while businesses were in a "no-hire/no-fire mode" four to six weeks prior, they are now beginning to discuss and plan for future layoffs. Recent corporate announcements include Amazon's 14,000 job cuts and Verizon's plan to reduce 15,000 workers.
Waller advocates for the Federal Reserve to implement another interest rate cut during its upcoming meeting next month. This action would aim to stimulate demand and support the labor market. However, minutes from the latest Fed meeting, released on Wednesday, reveal differing views among central bank policymakers.
Several members of the Fed's rate-setting committee suggested that maintaining current interest rates for the remainder of the year would be appropriate. They cited that inflation has persisted above the Fed's 2% target. This inflation trend is attributed in part to President Trump's tariffs, which some Fed policymakers anticipate will continue to exert upward pressure on goods prices into the next year.
Data Availability Challenges
Typically, the Federal Reserve would have October and November jobs data available before its next meeting. The government shutdown has delayed the release of these reports until after the meeting, with some October data potentially not being published at all. The release status of the October inflation report also remains uncertain.
Despite these data limitations, Waller stated that the Fed is not operating without information. They gather insights from businesses such as Target and McDonald's, which report that many consumers are exercising caution with their spending. Waller observed, "You just go talk with firms that work with low- and middle-income households, they'll tell you point blank, they're just not coming in the door. And then these firms are not going to be hiring." This cautious consumer behavior is seen as a potential factor impacting the job market.
While government data on consumer spending has also been delayed by the shutdown, anecdotal reports indicate that higher spending levels are predominantly observed among wealthier households, potentially influenced by gains in their stock portfolios.
Unemployment Rate and Contributing Factors
The September report also updates the unemployment rate. In August, the jobless rate stood at 4.3%, marking an increase from the beginning of the year but remaining low by historical standards.
The unemployment rate is influenced by two primary factors: the number of available jobs and the size of the labor force. The administration's immigration policies have reduced the number of foreign-born workers, while many native-born baby boomers are entering retirement. Some analysts attribute the slowdown in hiring largely to this reduction in the worker supply.
Conversely, Waller posited that the slowdown is primarily driven by a decreasing demand for workers, which could result in elevated unemployment in the coming months. He stated, "There's definitely a reduction of supply. But to me that is masking the reduction in demand and that's what I'm concerned about."