Absent a jobs report, here are some other ways of looking at the US labor market

Due to the federal shutdown, the September jobs report was not released, leaving the US labor market's state uncertain, though proxy data suggests a slowdown. While consensus estimates anticipated 50,000 new jobs and a 4.3% unemployment rate, underlying trends indicate weaker hiring (averaging 29,333 jobs monthly over the past three months) and elevated continuing jobless claims at four-year highs. Sectoral performance is divergent, with strong healthcare employment contrasting sharply with significant declines in construction job openings. Overall, the market presents a mixed picture of softening conditions and increased vulnerability, despite a potentially stable headline unemployment rate influenced by demographic shifts.

Analysis

The absence of the official September jobs report due to the federal shutdown has created significant uncertainty, forcing reliance on a mixed array of proxy indicators. While consensus estimates from FactSet anticipated a 50,000 job gain and a stable 4.3% unemployment rate, alternate data points to a more fragile labor market. Notably, ADP's report indicated a private-sector job loss of 32,000, directly contradicting expectations of a 62,000 gain and highlighting downside risk. The market is also experiencing a sharp sectoral divergence, with healthcare remaining a stalwart driver of employment, while economically sensitive sectors like construction show severe weakness, evidenced by a 115,000 plunge in August job openings. Underlying metrics signal a broader slowdown, as recent job growth has averaged just 29,333 per month, continuing jobless claims are hovering at four-year highs, and the share of long-term unemployed has reached its highest point since 2016, excluding the pandemic. The stability of the headline unemployment rate is misleading, as demographic shifts have lowered the number of jobs needed to maintain it to approximately 50,000 per month, masking the deceleration in hiring.

Key Decisions for Investors

• Given the absence of official BLS data and negative signals from proxies like the ADP report, investors should adopt a more defensive posture, potentially reducing exposure to economically sensitive sectors until a clearer macroeconomic picture emerges.
• The stark divergence between strong employment in healthcare and a sharp contraction in construction suggests focusing on non-cyclical sectors, as the former continues to benefit from inelastic, demographically-driven demand.