A Key Baseline Preceding Disruption in the Data
With the shutdown delaying significant data collections for October and part of November, the report will be for a while, the only clean picture of the labor market. Much of the information for the October report, including the headline jobs number, will now be in the November report, and that release will take place on December 16. The Bureau of Labor Statistics has said that household survey data was not able to be collected during the shutdown.
Economists expect that the US added 50,000 jobs in September and the unemployment rate remained at 4.3%. These expectations represent an increase over the previously-reported 22,000 gains in August. If hiring comes in around expectations, 2024 will remain on track to be the year with the lagging job growth, not counting the pandemic year, since the Great Financial Crisis.
Allison Shrivastava of the Indeed Hiring Lab said that she anticipates only modest changes from last month, claiming that we still have a slow job market. The majority of hiring has been done in health care and social services – a finding consistent with private-sector data released during the shutdown.
Risks for Monetary Policy and Slow Labor Cycle
While economists do not expect discoveries of dramatic surprise, the report displays risks for monetary policy. The Federal Reserve cut interest rates by a quarter on October 29, and Fed Chair Jerome Powell noted “a less dynamic and somewhat softer labor market.” Oliver Allan at Pantheon Macroeconomics said any negative trends that developed could have had a longer timeframe to magnify in the weeks of limited data visibility.
Job growth was projected to cool off from the surge in hiring after the pandemic. The report in particular showed months of notable weakness. Since May, the economy has added an average of just 31,000 jobs per month – roughly one-fifth the pace, based on the BLS data, of the average 155,300 jobs per month in 2026.
Shrivastava argued that policy changes, including regularly violated tariff rates under the Trump administration, contributed to uncertainty.
The overall economy has continued to grow, and consumer spending has held up, but mostly on the backs of higher-income households. Shrivastava noted that this lopsided consumer spending is creating a somewhat fragile economic environment. This splitting of consumers is related to an uneven labor market, where job growth outside of health care, social services, and parts of leisure and hospitality were flat or negative.
Other pressures exist on job creation from immigration policy, artificial intelligence, federal employment and cutting funding, high interest rates, and increases in hiring during the pandemic. These all contribute to wage pressure, which contributes to workers' accessibility to enter and remain in the workforce.
Continuing unemployment claims have remained at around four-year highs, at 1.957 million as of October 18, which is the highest recorded since August. Shrivastava described these claims as "precarious" and "anemic," but ultimately not entirely negative.
A Cautious Outlook and 2026 Expectations
Even with slow job growth, the acceleration of layoffs has not notably increased. First-time unemployment claims were at 232,000 as of October 18, which is essentially the same as it was in September. Economist Oren Klachkin of Nationwide stated that concern will arise if claims move consistently above 300,000 to 400,000.
Klachkin noted that economists at Nationwide do not foresee a recession anytime soon. He compared the job market to a marathon nearing the end, which has experienced a surge after the pandemic and is subsequently slowing down as it progresses to the end of the cycle. Vulnerable, but still expected to push through potentially with more strength in early in the year, as clarity increases regarding tariffs and enables short term fiscal support via tax and spend measures.
He added that the recent third-quarter corporate earnings seem to indicate that the private sector ecosystem remains cautiously optimistic about economic conditions heading into 2026.
