The U.S. job market is slowing, not collapsing
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It appears that the U.S. job market continued its long, gradual slowing in October, but did not make a clear break for the worse (or for the better).
The big picture: We're getting a labor market that is distinctly less favorable for job seekers, but it's not the kind of full-on rout you see when a recession is imminent.
- That's the cumulative implication of data released by various private firms, Federal Reserve banks and state government agencies shedding light on the October employment situation.
- With the longest government shutdown on record, now in its 38th day, economy watchers are left with artisanal economic data, which currently offers a relatively consistent picture.
By the numbers: The Chicago Fed's estimate of the unemployment rate, based on a mix of public- and private-sector data, is up to 4.36% in October. The last official government reading of the jobless rate in August was 4.32%. Not exactly a seismic shift.
- Similarly, despite a slew of announced layoffs, the actual number of people filing for unemployment benefits — as revealed by states' releases of their weekly claims numbers — remains low for now.
- JPMorgan economists peg last week's initial claims at 229,000, up a bit from 220,000 the previous week but well within the low range that has prevailed all year.
- Private-sector employment rose by 42,000 jobs in October, per data from payroll processor ADP, a rebound to positive territory after two months of contraction.
Yes, but: The ADP numbers do not incorporate government employment — and there was likely a steep decline in federal government employment in October because of the Trump administration's "deferred resignation program" that kept paying them through Sept. 30.
- That means it would be unsurprising if overall nonfarm payrolls contracted, due to the one-time reduction in federal payrolls.
Reality check: Indicators of where the job market is heading, as opposed to where it stands, do include some ominous warnings.
- Job listings site Indeed reports that postings fell to their lowest levels in four years as of Oct. 31, and that year-over-year posted wage growth has fallen to 2.5%, below the recent inflation rate.
- The New York Fed's Survey of Consumer Expectations, out Friday morning, shows that expectations the unemployment rate will be higher a year from now rose for the third consecutive month in October, to 42.5%.
The bottom line: There are some reasons to worry about what lies ahead for the job market, particularly in light of layoff announcements, falling job postings and workers' perceptions of conditions.
- But the actual state of things — how many people were working and earning wages — looks to have been stable in October.
Go deeper: Economist Jed Kolko has a lovely essay here on what the alternative sources of economic do and don't accomplish relative to the major government-issued reports.
