With the US government dark, alternate sources show a sluggish September for jobs

By Lucia Mutikani and Ann Saphir (Reuters) -Alternate data from public and private sources showed the U.S. job market likely remained stalled in September, with sluggish hiring but no change in an unemployment rate economists see as heavily influenced by a decline in the number of foreign-born workers. With the release of numerous official economic indicators delayed by a government shutdown, alternative data, such as a new "real-time" estimate of the unemployment rate issued on Thursday by the Federal Reserve Bank of Chicago, is likely to attract more than the usual scrutiny. The Chicago Fed report, which combines private and available public data, estimated the September jobless rate was 4.3%, 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 labor market that is likely to keep Fed officials on track to cut the benchmark interest rate by a quarter of a percentage point at the October 28-29 meeting.  Official reports on the U.S. labor market, including September monthly jobs data that had been scheduled for release by the Labor Department's Bureau of Labor Statistics on Friday, are for now suspended by the government shutdown that has put around 750,000 workers on furlough and halted many but the most critical federal government functions. Also delayed so far are the weekly jobless claims report, August factory orders and construction spending data. Depending on the length of the shutdown, the 15th since 1981, those and other delayed reports could still be available by the time the Fed meets in a little under four weeks. But policymakers were already discussing at-hand, if imperfect, substitutes for the September jobs report, among the main sources of additional data policymakers would receive before their next meeting. The Fed's rate cut discussion now leans heavily on policymakers' views of whether the labor market is holding up reasonably well, with the 4.3% jobless rate considered around full employment, or is at risk of a sharp rupture. The Fed last month cut its policy rate by a quarter of a percentage point to a range of 4% to 4.25% after job gains slowed sharply and the unemployment rate ticked up in August.  "The data dogs are howling because we are not getting our usual supply of information," Chicago Fed President Austan Goolsbee told Marketplace Radio on Wednesday. "The best number is the BLS number, but if we don't have that, we're going to use the Chicago Fed number and other numbers."  The Chicago Fed's new data series, updated twice monthly, showed the hiring rate for unemployed workers dipping slightly and the rate of layoffs and other job separations up a bit.  That put "limited upward pressure" on the unemployment rate, the bank said.  LABOR MARKET IS STAGNATING New data from technology firm Intuit, using a sample of roughly 400,000 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 0.37%. 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. U.S. employers meanwhile announced fewer layoffs in September, but hiring plans so far this year were the lowest since 2009, according to the latest report from global outplacement firm Challenger, Gray & Christmas that provided further signs of a labor 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% month-on-month to 54,064 in September. Employers have so far this year announced 946,426 job cuts, the highest year-to-date total since 2020.  Hiring plans so far this year have totaled 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 labor market, cost increases and a transformative new technology," said Andrew Challenger, senior vice president at Challenger, Gray & Christmas. "With rate cuts on the way, we may see some stabilizing in the fourth quarter, but other factors could keep employers planning layoffs or holding off hiring." Economists say lingering uncertainty from President Donald Trump's trade policy, immigration raids and the rise of artificial intelligence, have combined to reduce demand and labor supply. Nonfarm payroll gains averaged only 29,000 jobs per month in the three months to August compared to 82,000 during the same period last year. Challenger said the government accounted for the bulk of planned layoffs, with 299,755 job cuts announced so far this year, part of an unprecedented campaign by the White House to reduce the federal workforce. Trump threatened to fire more federal workers if there was a shutdown. The surge in AI is costing jobs in the technology sector, with companies in the industry announcing 107,878 layoffs so far this year. Challenger said AI was also making it difficult to land positions, particularly for entry-level engineers. Should the shutdown persist into next week, reports due later this month, 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.   (Reporting by Ann Saphir; Additional reporting by Howard Schneider and Lucia Mutikani; Editing by Jamie Freed and Andrea Ricci)

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