With the US government dark, alternative sources show a stalled jobs market in September

San Francisco - Alternative data from public and private sources, a substitute for official statistics delayed by a government shutdown, showed the US job market likely remained stalled in September with sluggish hiring but no change in an unemployment rate economists see as influenced by falling numbers of foreign-born workers.

The US government’s 15th shutdown since 1981, with some 750,000 workers furloughed, has delayed publication of key reports including the September unemployment and jobs data due on Oct 3 from the Bureau of Labour Statistics, a key reference point for US Federal Reserve policymakers who meet in a little under four weeks to decide whether to cut interest rates again.

Also delayed so far are the weekly jobless claims report and factory orders and construction spending data for August. While the data could still be available for the Fed’s Oct 28 and 29 meeting depending on the length of the shutdown, alternative data, such as a new “real-time” estimate of the unemployment rate issued on Oct 2 by the Federal Reserve Bank of Chicago, is likely to attract more attention from Fed officials, economists and analysts trying to understand the economy while the government is idle.

The Chicago Fed report, which combines private and available public data, estimated the September jobless rate was 4.3 per cent, the same as in August and evidence that a feared rapid rise in unemployment had not yet begun.

But details of the report, along with other data, pointed to ongoing sluggishness in the labour market that is likely to keep the Fed poised to cut the benchmark interest rate by a quarter of a percentage point.

The Fed’s rate cut discussion now leans heavily on policymakers’ views of whether the labour market is holding up, with the 4.3 per cent jobless rate considered around full employment, or is at risk of a sharp rupture. The Fed in September cut its policy rate by a quarter of a percentage point to a range of 4 per cent to 4.25 per cent after job gains slowed sharply and the unemployment rate ticked up in August.

Labour market stagnating

Earlier this week, data from payroll processor ADP indicated private payrolls fell 32,000 in September. The ADP data may also take on added weight in the absence of Bureau of Labour Statistics updates, and was cited by Fed governor Christopher Waller in August as helping ground internal Fed staff estimates that showed “continued deterioration” in the job market beginning in May.

New data issued on Oct 2 by technology firm Intuit, based on a sample of roughly 400,000 of small businesses from its QuickBooks platform, showed firms with from one to nine employees shed more than 48,000 jobs in September, a decline of around 0.4 per cent. Firms of that size have seen a steady drop in employment since early 2024, with average monthly employment for the latest quarter down about 400,000 from a peak of 13.1 million.

US employers meanwhile announced fewer layoffs in September, but hiring plans in 2025 were the lowest since 2009, according to the latest report from global outplacement firm Challenger, Gray & Christmas that provided further signs of a labour market at a standstill as the demand and supply of workers fall because of tougher immigration policy and technological advances. The firm said planned job cuts dropped 37 per cent month on month to 54,064 in September. Employers have so far in 2025 have announced 946,426 job cuts, the highest year-to-date total since 2020.

Hiring plans so far in 2025 have totalled 204,939, the lowest year to date since 2009 when the economy was just emerging from the Great Recession.

“Right now, we’re dealing with a stagnating labour market, cost increases and a transformative new technology,” said Mr Andrew Challenger, senior vice-president at Challenger, Gray & Christmas. “With rate cuts on the way, we may see some stabilising in the fourth quarter, but other factors could keep employers planning layoffs or holding off hiring.”

But there are conflicting signals, and a puzzle over whether weak job growth is due to a slowing economy or a lack of workers, or both. Nonfarm payroll gains averaged only 29,000 jobs a month in the three months to August compared with 82,000 during the same period last year, yet the jobless rate has been fairly stable.

Economists say lingering uncertainty from President Donald Trump’s trade policy and the rise of artificial intelligence have reduced demand for workers. But the administration’s immigration crackdown may also be limiting the availability of labour.

Should the shutdown persist into next week, reports due later in October, including consumer price, retail sales, housing starts and producer inflation data for September, will probably not be published, impacting decision-making by households, investors and policymakers. REUTERS