For a jobs day data fix in a US shutdown, here is what the experts are saying

With U.S. Bureau of Labor Statistics employees furloughed due to the federal government shutdown, the agency’s website shows a release from Wednesday as its most recent data update instead of the monthly employment report for September that had been scheduled for Friday.

But analysts and central bank watchers are churning through their own models and data sources to get what insight they can about the state of hiring and firing across the U.S. economy.

The jobs report is critical to U.S. Federal Reserve decisionmaking, and central bankers aren’t completely blind. Coincidental to the government shutdown, the Chicago Fed began releasing its own unofficial estimate of the national unemployment rate, relying partly on private “real-time” data, and said it remained roughly steady last month at 4.3%.

Goldman Sachs, using state unemployment claims still being reported to the Department of Labor and posted to a public database, estimated seasonally adjusted new claims for unemployment benefits ticked up slightly to 224,000 for the week ending September 27, while the estimate for those on benefits rolls beyond one week fell slightly the week earlier. Neither is a signal of decaying labor market conditions.

Closely watched data from the private Institute for Supply Management on Friday showed U.S. services sector activity stalled in September. The survey’s gauge of employment in the sector inched higher but remained mired in contraction territory for a fourth straight month as companies remained reluctant to backfill open positions while also finding it hard to find qualified applicants.

Between private sector data, surveys the Fed generates on its own, and other sources, “we have enough information to do our job,” Federal Vice Chair Philip Jefferson said on Friday in Philadelphia. “My expectation is that I’ll be well informed before I go into the October meeting.”

But the longer the federal government remains idle, the more policymakers and markets may be driven by the best guesses of analysts who all have their own ways to parse the information at hand.

This moment is important for the Fed because officials are worried that, if history holds, the recent slow increase in the unemployment rate could accelerate into a jobs crisis. Trying to avoid that is why Fed officials cut interest rates at their last meeting.

Deciding whether another quarter-percentage-point cut is appropriate at the October 28-29 meeting hinges in part on whether the unemployment rate is holding steady or showing evidence of a faster increase. Complicating the analysis is the influence tougher immigration enforcement is having on the labor force. With fewer foreign-born workers, the workforce is smaller than it would be otherwise, and fewer additional jobs are needed each month to keep the unemployment rate steady.

Michael Pearce, deputy chief U.S. economist for Oxford Economics, combed through private data like the job declines registered by payroll processor ADP for September and a drop in layoffs seen by staffing firm Challenger, Gray and Christmas, and coupled that with internal models of workers flowing into and out of jobs. He saw no dramatic change in the job market between September and August.

The Fed has been wrestling with that for months, with some policymakers seeing it as a sign of resilience and others as a crack that could turn into a rupture.

Comerica Bank Chief Economist Bill Adams agreed the economy remained “in a low-hire, low-fire, low-gear mode,” but with risks.

“Layoffs continue to run quite low. Employers are reluctant to let go of workers after struggling to staff up during the post-pandemic recovery,” he wrote, noting that a Cleveland Fed staff model based on a sample of layoff WARN notices was down 22% in August compared to the year before.