The shutdown meant no jobs report. Here's what it would have said about the economy

With the official BLS jobs report unavailable due to the government shutdown, alternative data sources indicate the U.S. labor market is softening but not collapsing. Private payrolls and job postings suggest anemic growth, with Indeed showing an 8.9% year-over-year decline in postings and ADP reporting a 32,000 job loss in September, though the unemployment rate likely held near 4.3%-4.4%. The market exhibits bifurcation, with strong demand in healthcare contrasting with weakness in other sectors, while consumer spending, as measured by BofA, remains solid despite the softer labor trends, presenting a notable dichotomy.

Analysis

If it just seems like the first Friday of the month wasn't the same without being able to pore through the Bureau of Labor Statistics' hotly watched monthly jobs report, don't worry. You probably didn't miss much. While the BLS has gone dark with the shutdown in Washington, other reports outside the government data suggest the labor market just plodded along in September. The Dow Jones consensus forecast was for growth of 51,000 in nonfarm payrolls with the unemployment rate holding steady at 4.3%. High-frequency data that includes job postings, private payrolls and state-by-state figures for initial jobless claims indicate that while employment growth continues to be anemic, the labor market overall isn't capsizing, at least not anytime soon. "We fight with the army we have at moments like this, where it's critically important that we're figuring out whether the economy is in a moment of transition," Chicago Federal Reserve President Austan Goolsbee said in a CNBC interview Friday. "This is what we have, and thus far it still continues to point to a pretty stable labor market." The Chicago Fed is one of those organizations looking to provide alternates to BLS data that had come under harsh White House criticism prior to this week's shutdown. Though the timing was coincidental, the central bank district in September unveiled its own dashboard of data measuring key labor market metrics including unemployment, the hiring rate and the layoff rate. Bottom line: The unemployment rate held flat at 4.3%, though another hundredth of a point or two would have pushed it to 4.4% — the highest since October 2021 but still low by historical standards. Other nongovernmental data showed similar trends: Conditions overall are softening, with job availability gradually shrinking. But employers are still reluctant to part with workers given the lessons from the Covid pandemic, when a rash of layoffs in the early stages was followed by the monumental task of refilling those jobs. At one point, open positions outnumbered available workers by more than 2 to 1. "A lot of the new entrants in the market, young workers, recent graduates, people who are already unemployed [are] having a hard time getting into the market," said Cory Stahle, senior economist at job postings site Indeed, which itself provides an encompassing menu of labor market data. "Regardless of what the unemployment rate is, people taking longer to find jobs is a sign of some economic distress for some households." Signs of imbalances Indeed's measure of job postings shows a decline of about 8.9% from a year ago as of Sept. 26, a sharper drop than the 5.5% reflected in BLS data, which only runs through August. Broader trends suggest an uneven labor market, with professions like health care continuing to thrive while other fields lag, Stahle said. "Overall, things are looking pretty good, but a lot of those job gains, a lot of those postings and hiring, are coming from health care, and so it's hard to say that the labor market is fully in balance when it's not providing equal opportunities across different occupations," he said. BLS data also has shown a fairly sizeable tilt in openings toward health care-related professions, with business and professional services next followed by leisure and hospitality. Government had been a leader but has pulled back since President Donald Trump began his term in January with a vow to pare down the federal payroll. "Right now is a good time to be a nurse, not so good of a time to be working as a software developer," Stahle added. "That bifurcation of the labor market is also an important thing to look at here, not just the overall balance and an overall number." Other indicators paint a similar picture, though ADP's private payroll count for September showed a decline of 32,000 jobs and an August loss of 3,000 as well. ADP on occasion also has been maligned for being incongruent with BLS data. However, the firm's reports are getting a closer look after it signaled a slowdown in the labor market well before the BLS marked down its own counts also to show a weak hiring picture. It wasn't just the monthly nonfarm payroll account that went missing because of the shutdown: The Labor Department also didn't release its weekly tally of initial jobless claims. Goldman Sachs came to the rescue for that metric, figuring that state-level claims data that was filed pointed to a national total of 224,000 — slightly higher than the previous week but largely in line with trends through most of the year. Other measures Beyond simple job or payroll count, spending data also can be a useful indirect gauge. Bank of America's credit and debit card tracking showed spending on a steady uptick in September. Total card outlays compared to a year ago increased 2.2% for the week ending Sept. 27. "Spending growth remains solid despite soft labor data. We will continue to monitor this dichotomy," BofA economist Shruti Mishra said in a client note. Similarly, Fiserv's small business index showed annual sales and transactions increased 2.3% in September, reflecting the same pace for the past three months. However, other small business indicators show weakness. "Right now we see that there are a lot of firms that have job openings. There are, unfortunately, very few that get filled," Bill Dunkelberg, chief economist at the National Federation of Independent Business, told CNBC on Friday. "So plans to fill them are always very optimistic, but when the dust clears, very few jobs actually get created." In the absence of the official Bureau of Labor Statistics (BLS) report due to a government shutdown, a mosaic of alternative data sources indicates the U.S. labor market is softening but not collapsing. High-frequency indicators suggest anemic employment growth, with Indeed's job postings declining 8.9% year-over-year and ADP's private payroll report showing a 32,000 job loss for September. Despite this, the unemployment rate is estimated to have held steady near 4.3%, and initial jobless claims, as calculated by Goldman Sachs using state-level data, remain stable at 224,000, preventing a definitively bearish outlook. A key insight from the private data is a significant market bifurcation, with strong hiring demand in defensive sectors like healthcare contrasting sharply with weakness in fields such as software development. Compounding this complexity is a notable dichotomy between soft labor data and resilient consumer activity; Bank of America's card tracking showed a 2.2% year-over-year spending increase, and Fiserv's small business index recorded a 2.3% rise in sales, suggesting consumer health has not yet been materially impacted by the hiring slowdown.

Key Decisions for Investors

• Given the dichotomy between a softening labor market and resilient consumer spending, investors should maintain a balanced posture, watching for any deterioration in spending data which would serve as a confirmation of a broader economic slowdown.
• It is prudent to re-evaluate sector exposures, favoring industries with demonstrated hiring strength and inelastic demand, such as healthcare, while trimming exposure to cyclical sectors like technology and professional services that are exhibiting labor market weakness.
• Investors should closely monitor high-frequency private data, such as ADP's payroll reports and Indeed's job postings, to gain an early edge in assessing labor market trajectory before official government statistics resume.