Labor market worsens, even without federal jobs report
Nick Rummell
MANHATTAN (CN) — The government shutdown blocked a widely anticipated jobs report, but other employment data this week show the labor market continues to deteriorate.
Economists predicted the jobs report would show a pickup of about 50,000 jobs, though given other employment data this week that might have been more hope than reality.
According to payroll company ADP, the private sector lost 32,000 jobs last month, continuing the downward trend the last two months and far worse than what most market analysts predicted. The company’s July jobs report was revised downward drastically, from an initial estimate of 54,000 jobs gained to a loss of 3,000 jobs.
The Midwest bled out the most positions, losing 63,000 total, while other regions of the United States managed to gain at least a few thousand jobs each. Small- and mid-sized companies also lost a total of 60,000 jobs, while companies with more than 500 employees picked up 33,000 positions.
“Despite the strong economic growth we saw in the second quarter, this month’s release further validates what we’ve been seeing in the labor market: that U.S. employers have been cautious with hiring,” Nela Richardson, ADP’s chief economist, said in a statement.
Deeper into ADP’s data, some larger cracks are showing, with manufacturing losing 2,000 jobs and the construction sector shedding 5,000 jobs. The only three sectors in positive territory were education, health care and information technology.
“Ordinarily, ADP’s estimate of monthly employment is of secondary importance to macroeconomic trainspotters,” said Bill Adams, chief economist at Comerica Bank.
However, he added, the private-sector jobs report “could have outside influence” on the Federal Reserve’s next decision on interest rates, Adams said, especially if the government shutdown lasts long enough to impact the next employment report, due on Oct. 29.
When the government shutdown ends, the Bureau of Labor Statistics will likely issue its September jobs report within a couple business days. By then, the agency may have a new commissioner.
However, this week the White House withdrew the nomination of Heritage Foundation economist E.J. Antoni — who had been nominated to replace the fired previous commissioner — without explanation. Antoni has been highly critical of the agency for years.
The Labor Department’s weekly unemployment report was also delayed. However, this week BLS managed to release its monthly JOLTS data, which tracks job openings and separations and is a month behind the other employment reports.
That report was also slightly worse than expected, reinforcing the idea the U.S. labor market is stagnant, with 7.2 million job openings for August compared with the 7.1 million forecast. The revised July data showed 27,000 additional job openings, while the number of hires and quits were revised down by 68,000 and 42,000 positions, respectively.
These changes were not enough to alarm analysts, however.
“We’re keeping an eye on layoffs, and there isn’t any sign that they’re making a sustained break higher,” Ryan Sweet, chief U.S. economist at Oxford Economics, said in an investor’s note. “The layoff rate hasn’t budged over the past three months and is identical to that seen last year.”