The US economy saw 'essentially no job growth' last month: Moody's

Private sector data, notably from Revelio Labs and ADP, suggests the U.S. economy experienced "essentially no job growth" in September, filling the information gap left by the government shutdown's delay of the official BLS report. While Revelio indicated a modest 60,000 gain concentrated in healthcare and education within three states, ADP reported a 32,000 private sector decline, with smaller companies disproportionately affected. This composite view, supported by declining consumer confidence in job availability, points to a weakening labor market, complicating economic assessment and potential policy responses for institutional investors.

Analysis

The US economy saw 'essentially no job growth' last month: Moody's Private data suggests job market declined with growth concentrated in just three states and healthcare sector, Zandi said A leading economist is warning that job creation in the U.S. economy is slowing to a crawl as the ongoing government shutdown precluded the release of the September jobs report last week. Moody's Analytics chief economist Mark Zandi wrote Sunday in a post on X noting that the shutdown forestalled the release of the September jobs report from the Bureau of Labor Statistics (BLS) as scheduled on Friday, which caused data watchers to focus on private data reports in the absence of the BLS' data. "While not a replacement, there are good private sources of jobs data," Zandi wrote and noted Revelio Labs develops a report estimating job growth using professional networking sites like LinkedIn as a reference point. "The data show that employment increased by 60k in September, almost entirely concentrated in the education and healthcare sector." "Even this paltry gain likely overstates things, as Revelio's data has been revised significantly lower of late, as more data comes in. Also of note, the job growth last month was almost exclusively in California, New York, and Massachusetts," he noted. THE SEPTEMBER JOBS REPORT IS DELAYED BY THE GOVERNMENT SHUTDOWN- WHAT WAS IT EXPECTED TO SHOW? Zandi pointed to last week's private jobs report from ADP, which showed a decline of 32,000 jobs in September, with job gains concentrated in the healthcare sector at very large companies. He noted that smaller companies "are getting hit hardest by the tariffs and restrictive immigration policies," while the overall economy likely saw a larger than reported decline because "government employment surely also fell in the month given the ongoing DOGE-related cuts." "Averaging the Revelio and ADP employment estimates for September suggest that there was essentially no job growth during the month," he wrote. PRIVATE SECTOR LOST 32,000 JOBS IN SEPTEMBER, ADP SAYS "Other job market data back this estimate up, including the Conference Board's jobs easy versus hard to get questions in its monthly consumer confidence survey. It fell and is now as low as it has been since coming out of the pandemic in early 2021. There's no better predictor of changes in unemployment, which thus likely rose again in September," Zandi added. "The bottom line is that not having the BLS jobs data is a serious problem for assessing the health of the economy and making good policy decisions. But the private sources of jobs data are admirably filling the information gap, at least for now. And this data shows that the job market is weak and getting weaker," Zandi wrote. FED'S GOOLSBEE SAYS CENTRAL BANK HAS OTHER DATA OPTIONS IF SHUTDOWN DISRUPTS ECONOMIC REPORTS The BLS' September jobs report that was slated to be released on Friday before the government shutdown began on Wednesday was expected to show a gain of 50,000 jobs, according to economists polled by LSEG. Additionally, the unemployment rate was estimated to remain unchanged at 4.3%. GET FOX BUSINESS ON THE GO BY CLICKING HERE Once the government shutdown ends, the BLS is expected to release the September jobs report – although it may not immediately follow the resumption of government funding as the agency will likely need some time to complete the report before publication. The U.S. labor market evidenced significant deceleration in September, with private data sources indicating "essentially no job growth" amid the delay of the official BLS report. Revelio Labs estimated a modest 60,000 job increase, primarily concentrated in healthcare and education across California, New York, and Massachusetts, while ADP reported a 32,000 decline in private sector employment, disproportionately affecting smaller companies. This composite view, as highlighted by Moody's chief economist Mark Zandi, raises material concerns about the broader economic health. Further corroborating this weakness, the Conference Board's consumer confidence survey showed job availability perceptions at their lowest since early 2021, suggesting a likely rise in unemployment and contributing to a strongly negative sentiment score of -0.65. The absence of official BLS data poses a critical challenge for accurate economic assessment and policy formulation, forcing reliance on disparate private indicators. The reported job stagnation, coupled with its concentrated nature, implies uneven economic health and potential headwinds for consumer demand and overall GDP growth, which could necessitate a reassessment of monetary policy expectations.

Key Decisions for Investors

• Re-evaluate portfolio exposure to labor-sensitive sectors and companies, particularly those reliant on broad-based consumer spending or smaller business health, given the observed job stagnation and regional concentration of growth.
• Monitor upcoming economic data, especially the delayed BLS report and subsequent private sector releases, for confirmation of the labor market's trajectory and its implications for monetary policy.
• Consider defensive positioning or hedging strategies against potential economic slowdowns, as the "strongly negative" sentiment and weakening job market indicators suggest increased downside risk in the near term.