With the lingering effects of historically long government shutdowns, the November jobs report comes at an odd time — a Tuesday in mid-December instead of (usually) the first Friday of the month.
The 43-day federal funding outage resulted in a sudden freeze on key economic data at a critical time for U.S. businesses and households.
The slow but steady unfreezing of deferred data over the past month will intensify further this week: over the next three days, major reports on retail sales, inflation and the labor market are due.
The latter two also come with a bit of a holiday bonus: November’s jobs report and consumer price index will both be packaged with about half of October’s data.
If not unprecedented, this would be very appropriate in a season filled with buy-one-get-one-free 50% off deals.
Tuesday morning’s jobs report is expected to show just 40,000 jobs were added last month, with the unemployment rate holding steady at 4.4% – historically low but still above levels seen in recent years.
However, economists said this time the report may be a bit confusing.
“Government shutdowns don’t happen very often, so when you have a business the size of the government, there’s always some uncertainty. [Bureau of Labor Statistics] “So I think it’s worth being humble and prepared for anything when you read the report,” said Daniel Zhao, chief economist at Glassdoor.
The U.S. Bureau of Labor Statistics’ monthly snapshot of the labor market comes from two robust surveys: one of businesses and public sector entities (which tracks wages, wages, and hours) and another of households (which tracks labor force conditions and demographic details). The latter survey is conducted in partnership with the U.S. Census Bureau, whose staff conduct interviews with households and collect primary data through in-person visits, phone calls, emails and online.
However, during the shutdown that ran from October 1 to November 12, the main federal statistics agency effectively came to a standstill. The vast majority of staff have been furloughed, and the agency itself has suspended nearly all data collection, processing and distribution.
“It’s actually very difficult to ask people what they were doing in the past,” Zhao said. “Their memory declines very quickly. So, instead, it makes sense to start focusing on future data.”
Because no workers were available for household interviews during the survey week, the Bureau of Labor Statistics later announced that October labor force data, including the unemployment rate, would not be available and that the agency would not release a separate jobs report for that month. Instead, the electronically collected October data will be included in the November jobs report.
In November, the collection period for both surveys was extended and additional processing time was provided, the BLS said. As a result, the November jobs report was postponed from December 5 to December 16.
“I think this report is most likely to show slow job growth,” Zhao said. “Of course, there’s a big asterisk on it.”
That’s because the effects of the shutdown should become more apparent on Tuesday: The Bureau of Labor Statistics, which has strong transparency practices, inserts box notes into reports when important contextual or technical issues require it.
Bank of America economist Shruti Mishra wrote in a recent note to investors that while more than 700,000 federal workers were furloughed during the 43-day shutdown, a sharp negative number is not expected in October or a subsequent jobs boom in November.
“Agency surveys count as employed workers who were paid/expected to be paid for any period during the reference week,” she wrote. “In fact, the shutdown had only a minimal impact on employment in 2013 and 2019.”
If anything, the employment data for October and November will likely be more comprehensive and subject to fewer revisions due to longer submission and collection times, Zhao said.
While Tuesday’s report paints a partial picture of the labor market, a wealth of private and public data released in recent weeks has helped fill in the gaps.
Payroll giant ADP’s monthly private sector employment report estimates a net gain of 47,000 jobs in October and a net loss of 32,000 jobs in November.
Weekly jobless claims, which are closely watched as an indicator of layoff activity, remained essentially steady (minus distortions caused by the Thanksgiving holiday).
Separately, new data released last week by the U.S. Bureau of Labor Statistics showed that despite an increase in job openings in October, hiring continued to stagnate and layoffs increased as workers scrambled to keep their jobs.
“I think the September jobs number is probably the high-water mark that we’re going to see in the latest data,” said Tyler Speer, an associate professor of economics at the University of St. Thomas in St. Paul, Minnesota. “I think my estimate is between zero and 50,000 jobs between the two reports. One of them could end up being negative and the other could end up being positive.”
“But I don’t expect this impasse to change because we’re not creating enough jobs to bring the unemployment rate down,” he added.
Still, even before the shutdown, the October jobs report was expected to show weak, if not negative, job growth.
Between 100,000 and 150,000 federal workers are expected to have their paychecks stopped on Oct. 1 after accepting a “fork in the road” paid leave buyout proposal proposed by the Trump administration’s Department of Government Effectiveness months ago.
That’s about 5% of total federal employment, a small fraction of total employment, but a significant decline would distort October employment forecasts.
Mishra wrote that there could be a net loss of 65,000 jobs in October, with the public sector losing 120,000 jobs and the private sector adding 55,000 jobs.
That would be a sharp decline from September’s higher-than-expected job growth of 119,000 jobs, which Mishra said could be revised downwards.
Economists say that in addition to headline employment data and November’s unemployment rate, the inside look at last month’s agency and household surveys can provide a more important perspective on how the pillars of the U.S. economy are performing.
Dean Baker, senior economist at the Center for Economic and Policy Research, noted that job growth in specific industries deserves attention.
He expects employment in commodity-related industries to decline again, while health care and potentially restaurants will continue to lead job growth.
Wage growth is expected to slow, which could further pressure consumer spending going forward.
Cory Stahle, economist at Indeed Hiring Labs, said the trajectory of the labor force participation rate, employment-to-population ratio and unemployment data will be important guides to understanding how Americans are experiencing the job market.
“Ultimately, if you’re creating 100,000 jobs a month, but … the unemployment rate keeps rising, or people say, ‘I can’t find any jobs; I’m not going to engage in job hunting anymore,'” that will eventually catch up to the labor market, Stahler said.
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